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I nside

23. Economy: (27) Realities that we refuse to see

Team Chief Editor

Dr. Zeeshan Khalid

chief.editor@valuechain.com.pk

Advisor Editorial Team A.B. Shahid

adivsor@valuechain.com.pk

Editor

Nadeem Abdul Ghani editor@valuechain.com.pk

Deputy Editor Jauhar Ali

dy.editor@valuechain.com.pk

Research Editor

Mustafa Ali Shaikh

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Assistant Editor Syed Asif Ali

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Volume - 2

47. Health: Growing vegetables with 17. Politics: (27)waste in Karachi sewage sludge & industrial Western worries over Iran-Israel conflict 13-16 Currency swaps: their implications for the US$ A grand fiscal failure and what it foretells Celebrations or protests – loss of economic activity pays for them 17-18 What 2012 holds in store for Iran 19-24 PSDP- sadly, the easiest head to chop 25-26 EU Trade initiative for Pakistan: pluses and minuses 31-34 Trade finance vs. sanction compliance – banks between two fires Capital Markets and Corporate Growth

SOCIAL ISSUES

35-37 Corruption, an immortal insect: How to soften up its stings?

38 Wall Street: the secrets fresh graduates don’t know 39-43

K. Jehangeer Khan

Underground Coal Gasification

Visualizer

45-46 Pesticide poisoning - A matter of concern

Ali Siddique Dadi

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General Manager

57 Aakash: The world’s cheapest computer gains huge response

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HISTORY

Mahmood Khan

Bureau Chiefs

Syed Saqibullah

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Ajmal Khan

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Mumtaz Abbasi

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16. Sharmeen Obaid Chinoy— First Pakistani to win Oscar

EDUCATION & TRAINING

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Issue - XI Mar - 2012 Price: PKR -150

59 Anarchism: is it madness or the craving for change 9-12 27-28 29 49-52 53-54 55-56

Global & National Briefs Voice of Industry - In brief Regulatory Compliance Events Monthly Commodity Review Monthly Stock Market Review

58 60 63-64 65-66

61. Sadequain – putting together pain, art and literature Science Art & Literature Sports Your Horoscope - March 2012

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L etters to the Editor Monthly

February 2012

to warn the ever sleepy administration in Sindh. Indeed, democracy has become a toxin that kills even the common sense of the politicians.

Allah Bux Badin

Prepared for a war in Persian Gulf ?

ACCO

UNTA

BILI

TY

Depleting forex reserves

Sir, by end February, the figures indicated that over $10bn had been paid out in debt servicing in the first seven months of FY12, while foreign direct investment flows had virtually frozen. This scenario foretells the possibility that, in the months to come, exchange reserves would be insufficient to import even essentials like fuel oil, let alone the likes of cooking oil and the rest.

As for the currency swap deals that could eliminate the role of exchange reserves in settling foreign trade transactions. There is not much that the government has told the masses.

Shouldn’t the rapidly developing scarcity of exchange reserves prod the government into announcing some very secure (zero state involvement therein) measures that could attract deposits from the non-resident Pakistanis since remittances, that are consumed by the beneficiaries won’t help build exchange reserves.

Liaquat Ali Hyderabad

Democracy – killer of commonsense?

Sir, this is with reference to Mr Zahid Jamali’s letter (February 2012). I fully agree with his point of view. Heavy snowfall in the North is both a good and bad sign, but what I find worrisome is the downside because it foretells a far bigger flood tragedy in the summer of 2012 than that experienced in 2010 and 2011.

The government in Sindh hasn’t done much to repair the loss caused to physical infrastructure of the province. There is a strong possibility that we will face greater more misery in the floods that are highly likely in 2012.

Not one parliamentarian has found the time to utter a single word on this subject

Sir, as I write these lines, rumour is that on March 1, prices of all the petroleum products, natural gas, CNG and LNG are going to rise yet again. While I can understand this rise in prices because of the rise in global oil prices, the bigger issue is: where will we stand if America did attack Iran under pressure from Israel. Will this conflict not close the Persian Gulf and the Strait of Hormuz?

Pakistan buys its entire fuel oil and LNG supplies from the Arab Gulf states–Saudi Arabia, Kuwait, and Qatar. Even if these states are not affected by this war (highly unlikely), for several months navigation in the Persian Gulf would virtually become impossible.

How will we survive under that scenario?

Do we have the oil storage capacity where we could store oil for about three to four months? If that’s not so, which I believe to be the case, is the government planning a strategy for facing this crisis?

Wajid Ali Khan Karachi

The sleepy economists

Sir, your forthright editorial – Dilemmas the sleepy economists now confront – was indeed an eye opener. The distortion in the debt-toGDP ratio gave politicians, sadly worldwide including the so-called enlightened states, the license to go on burdening the state with an unjustifiable load of debt.

Worse still, it allowed politicians to spend state funds, often on wasteful projects and affairs.

In Pakistan, waste was compounded by blatant corruption. It is no surprise that Pakistan almost doubled its public debt in the last four years, and with the economy on a slide, there are hardly any chances of the state increasing its tax-to-GDP ratio to muster the resources to repay its debt.

The worst is yet to unfold when the state defaults on its debt repayment commitments to both domestic as well as foreign lenders. How will that damage Pakistan’s image is something that no politician cares about. Some democracy we have!

Dawood Zia Islamabad

Integrity of electoral process

Sir, after the by-elections in Tando Mohd. Khan wherein PPP’s candidate Waheeda Shah hit a lady polling officer,

7

the victim was made to address a press conference to publically forgive the PPP candidate. It is interesting to note that, although that polling officer doesn’t observe ‘purdah’, in the press conference she appeared wearing a ‘burqa’. Was she really the same polling officer or was it someone planted by PPP? Mohmand Khan Peshawar

Banks’ risk-aversion

Sir, Indeed by becoming risk-averse the banks are refusing to take the route that can hasten economic revival; it will cause more businesses to close or fail and add to the NPLs of the banking sector. That this is already happening is clearly visible from the drop in output of the various sectors, especially industrial and services sectors. I totally agree with the view that not lending for reasonable risks is unfair.

What is worse is lending to the state that is wasting bank credit.

Asif Jangda Karachi

Are we witnessing a new India?

Sir, There has been considerable debate on the issue of Pakistan giving India the MFN status. I too have my regrets over India’s conduct during the past six and a half decades. Many scars were left behind by successive Indian regimes, Kashmir remaining a bleeding wound.

That said, if India has finally awaken to the key ground reality – nations sharing a common land mass can’t go on fighting – it is not a chance worth losing. The issue of Kashmir too could be resolved once trade relations created inter-dependence between India and Pakistan. This could convince every Indian, and consequently their leaders to resolve this issue forever.

Omar Anwar Dubai

Value Chain welcomes the views of its valued readers. Please send us your views on the address below:

Fatima Khalid Publications (Pvt) Ltd. Room No. 612, Clifton Centre, Block 5, Clifton, Karachi Email: ask@valuechain.com.pk

The Editor reserves the right to edit your letters for making it brief or for any linguistic flaws therein March 2012

G lobal Briefs Global events last month UN Chief Ban Ki-moon reportedly called on Israel on February 1 to halt settlement activity and offer the Palestinians a “goodwill gesture” .

have stashed away almost $ 5oo billion of illicit money abroad, parking the funds in countries considered the least corrupt.

US securities regulators charged four former Credit Suisse traders for their roles in an alleged scheme to overstate the prices of $3 billion in subprime bonds during the financial crisis.

Kuwait’s central bank governor resigned on February 13 in protest against a rapid rise in government spending,

On February 4, Russia and China vetoed a Western-Arab UN Security Council resolution backing an Arab League plan for Syrian President Bashar al-Assad to step aside On February 4 , Iran asked OPEC members not to raise oil production to compensate for a European Union embargo against the Islamic republic.

Aircraft engine giant Rolls-Royce opened its largest Asian facility in Singapore on February 13 as it looks to capitalize on the region’s booming aviation sector.

An Egyptian minister has reportedly told investigators that Washington provided funds to create a state of prolonged chaos in Egypt.

On February 4, US Defence Secretary Leon Panetta urged the international community to help pay for strong Afghan security forces despite worldwide economic pressure.

Commercial traffic resumed on the strategic Shatt al-Arab waterway after 31 years on February 7, 2012.

The European Union on February 10 asked India to use its influence to bring Iran to the negotiating table over its nuclear programme.

Indonesia said on February 10 it would study any approach by Iran to trade by barter as tightening sanctions hurt Iran’s ability to pay for basic staples.

Iran’s supreme leader Ali Khamenei on February 12 warned the Palestinian Islamist movement Hamas against any compromise in its fight against Israel.

Iran’s Foreign Ministry summoned the Azeri ambassador on February 12 accusing Azerbaijan in the assassination of an Iranian nuclear scientist blown up last month.

On February 13, India’s top police agency reportedly said that rich Indians

Britain has continued to sell arms valued at one million pounds to Bahrain despite the continuing political unrest and tension in the Gulf region.

According to UN Development programme announced on February 16, low cost solar panels and solar batteries will be provided to poor communities in 14 countries in Africa and Asia in the next four years for use in commercial businesses and economic development.

The president of Olympus,Tsuyoshi Kikukawa, named as key player in a scheme to shift $1.7 billion of losses from the camera maker’s balance sheet, has been arrested in Tokyo on suspicion of violating laws banning falsification of financial statements.

International money laundering watchdog, The Financial Action Task Force, on February 16 added Pakistan, Indonesia, Ghana, Tanzania and Thailand to its blacklist of nations that fail to meet international standards.

President Mohamed Nasheed of the Maldives resigned on February 7 after weeks of opposition protests.

A US Army officer has accused the American military of painting a misleading picture of progress in the war in Afghanistan while glossing over the Kabul government’s many failings.

President Obama’s administration is weighing options for sharp new cuts to the US nuclear force, including a reduction of up to 80 percent in the number of deployed weapons.[AFP]

The US and Britain on February 19 urged Israel not to attack Iran’s nuclear program as it would have grave consequences for the entire region.

China’s Vice President Xi Jinping has said that Beijing welcomes U.S. efforts to assert influence in the AsiaPacific region but that Washington must respect China’s interests and concerns in its own neighborhood.

US President Barack Obama on February 13 proposed a fund of $ 770 million to boost political and other reforms in Arab countries undergoing pro-democracy revolutions.

Yemen’s Ali Abullah Saleh stepped down after 33 years at the helm. He is the fourth veteran Arab leader to fall in a year of mass pro-democracy demonstrations that have rocked the region.

According to World Bank announcement on February 15, its President Robert Zoellick will leave the job at the end of his 5-year term on June 30, 2012.

9

Swiss banks could be forced to carry out checks on the tax status of foreign assets they hold under a new “clean money” strategy being proposed by the finance minister.

Australia’s Foreign Minister Kevin Rudd resigned on February 22 saying he was unable to continue without Prime Minister Julia Gillard’s support who was reportedly preparing to sack him.

Iran deployed on February 20 warplanes and missiles in an exercise to protect nuclear sites threatened by possible Israeli attacks and warned it could cut oil exports to more EU nations unless sanctions were lifted.

Russia’s foreign ministry spokesman Alexander Lukashevich said on February 22 that the United States could use the US Manas airbase in ex-Soviet Kyrgyzstan for an eventual strike on Iran over its nuclear programme.

March 2012

G lobal Briefs Global economy last month President Mahmoud Ahmadinejad predicted on February 1 that Iran’s economy would grow 8% over the next 12 months despite severe Western sanctions.

Eurozone banks are tightening lending conditions for both businesses and households even as demand falls as the sovereign debt crisis drags on.

On February 4, US Secretary of State Hillary Clinton called for Europe and the United States to trade more and urged them to work harder together to battle economic crises.

IMF said on February 6 that an escalation of Europe’s debt crisis could slash China’s economic growth in half this year. In its economic outlook report on the world’s second largest economy, the IMF highlighted China’s vulnerability to a global demand and urged Beijing to prepare stimulus measures in response.

China and Canada on February 8 signed a series of deals to boost modest levels of bilateral trade and finished negotiations on a foreign investment protection pact after 18 years of talks.

The central banks of UAE and Qatar have told lenders to stop financing trade with Iran. The Gulf has a long history of trade with Iran, especially in Dubai where there is a large Iranian trading community.

Saudi King Abdullah and IMF Chief Christine Lagarde met on February 3 in Saudi capital and reviewed IMF action and developments in the world economy.

Malaysia has halted palm oil exports to Iran because of payments problems and Asian oil buyers have cut crude purchases as Western sanctions tighten a financial noose around Iran. Traders in China said they would cut iron ore purchases from Iran which are worth over $ 2 billion a year.

The White House on February 13 proposed $ 800 million in economic aid for ‘Arab Spring’ countries swept by revolutions, while maintaining US military aid to Egypt.

US President Barack Obama has proposed $ 26 million in new funding to make sure China and other countries play by the rules of international trade. The increased funding would be used to hire 50 to 60 new people and improve the coordination of US government action against unfair foreign trade practices.

India’s inflation slowed to its lowest level in more than two years in January as food prices fell, sparking hopes that the central bank will start cutting interest rates sooner to battle the country’s economic slowdown.

On February 15, International Finance Corporation ( IFC) signed an agreement for $5 million equity investment in rice processing unit to help expand its production capacity and exports.

Japan and China agreed on February 19 they will jointly respond to any funding request from the International Monetary Fund which is looking to more than double the size of its war chest to help countries deal with the eurozone crisis.

The General Council of the World Trade Organisation has unanimously approved the draft decision of the request of EU to provide unilateral market access to Pakistan at zero duty.

China’s foreign direct investment shrank for the third consecutive month in January as firms in crisis-embroiled Europe slashed spending by over 40 percent.

German economy, Europe’s biggest, contracted 0.2 percent in the fourth quarter of last year as exports were hit by the eurozone debt crisis.

Greece has expressed hope it was within days of finally securing a 130-billion euro EU/IMF bailout to ease its debt crisis but markets reacted

10

ssceptically on February 16 as acrimony grew between Athens and eurozone partners led by Germany.

Eurozone finance ministers on February 21 agreed a 130 billion euro ($ 172 billion) rescue for Greece to avert an imminent chaotic default after forcing Athens to commit to .

Tehran on February 16 offered to boost bilateral trade with Islamabad to $ 10 billion within two months. It also showed interest in buying wheat and rice from Pakistan.

Iran has dismissed the new US sanctions on Tehran as part of a psychological war meant to sow discontent among Iranians and insisted that the measures would not halt the country’s nuclear program.

According to state radio report on February 7, Iranian President Mahmoud Ahmadinejad will appear in parliament next month to be grilled on his handling of the economy.

Standard & Poor’s on February 10 lowered the credit rating of 34 Italian banks. The rating agency also lowered Egypt’s long-term foreign and local currency ratings from B+ to B because of a sharp decline in foreign currency reserves and ongoing concerns about political stability.

In a recent interview with The Washington Post, Chinese Vice President Xi Jinping has called on the United States to prioritize economic growth instead of planning to boost its military strength in Asia.

Japan and China agreed on February 19 they will jointly respond to any funding request from the International Monetary Fund which is looking to more than double the size of its war chest to help countries deal with the eurozone crisis.

Eurozone finance ministers on February 21 agreed a 130 billion euro ($ 172 billion) rescue for Greece to avert an imminent chaotic default after forcing Athens to commit to.

Japan logged a record trade deficit with China in January as exports dropped by a fifth, underscoring concerns about how sharply China is slowing and its ability to buffer a frail global economy against European turmoil.

March 2012

N ational Briefs Pak politics last month US President Barack Obama has confirmed for the first time that US drones have targeted Taliban and al-Qaeda militants on Pakistani soil and that drones strikes in Pakistan are carried out on al-Qaeda operatives in places where the Pakistan military was unable to reach them.

Visiting Indian Commerce Minister Anand Sharma said on February 16 that a liberal visa regime between Pakistan and India is in final stages to facilitate movement across border of people especially businessmen.

Senator Prof. Khursheed Ahmed of Jamaat-e-Islami has said that the authority to install a caretaker set up should be entrusted to the Chief Justice of Pakistan instead of Election Commission of Pakistan in case of a disagreement between prime minister and opposition leader over an interim government.

MNA Zafar Baig Bhitani criticized government silence on killings of people in drone attacks and said “if you can’t protect us, either give us freedom or hand over to some other country which can protect us.”

Addressing a Press Conference in Moscow on February 8, Foreign Minister Hina Rabbani Khar said that Pakistan and Russia have agreed to promote and enhance bilateral relations in diverse fields including trade, energy and people-to-people contacts.

Consul General of Federal Republic of Germany Dr. Tilo Klinner on February 9 advised Pakistan to avoid seeking electricity generation from nuclear technology as it has both security and other environmental threats. He said Germany can help Pakistan in setting up small dams for hydel power generation.

Defence Minister Ahmad Mukhtar said on February 7 that Pakistan should reopen its Afghan border crossings, closed over two months ago , to NATO supplies after negotiating.

US State Department said on February 8 that Iran-Pakistan gas pipeline is a bad idea and Washington is engaged with Islamabad to find better alternatives for meeting its energy need.

US Ambassador to Pakistan Cameron Munter claimed on February 9 that supplies for US-led NATO forces in Afghanistan were continuing through Pakistan’s airspace.

Pakistan Tehreek-e-Insaf Chief Imran Khan on February 7 accused the troika – President Asif Ali Zardari, PML-N Chief Mian Nawaz Shareef and JUI-F Chief Maulana Fazal-ur-Rehman of being responsible for the political and economic damage to the country.

The Supreme Court on February 13 charged Prime Minister Syed Yousuf Raza Gilani with contempt of court for willfully defying, disregarding and disobeying court’s order of writing a letter to Swiss authorities to reopen graft cases against President Asif Ali Zardari.

NAB decided on February 15 to probe the scam pertaining to Rs. 4 billion investment in stock exchange market by officials of the National Logistic Cell.

Pakistan Tehreek-i-Insaf Chief Imran Khan has warned of a civil war if the forthcoming elections are not conducted in a free and fair manner. He alleged reiterated that both PPP and PML-N had struck a deal on the 20th Amendment to safeguard each other’s interests and not of the masses.

Pakistan Foreign Office on February 9 said that Pakistan has conveyed its concerns to Washington regarding the congressional hearing on Balochistan issue describing it as the country’s internal matter.

On February 16, President Asif Ali Zardari reiterated commitment for expeditious implementation of the IranPakistan Gas Pipeline Project, a 1,000 MW electricity transmission line and 100MW Gwadar power supply in order to meet the country’s growing demands for energy and power.

Interior Minister Rehman Malik informed the Senate on February 10 that no supply to US-led NATO forces in Afghanistan was being allowed from Pakistan.

Afghan President Hamid Karzai on February 16 sought help from the government of Pakistan and religious parties for advancing peace talks with Taliban in his country.

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The National Accountability Bureau (NAB) is reportedly preparing to take up cases against PML-N chief Nawaz Sharif and Shahbaz Sharif. The cases relate to default of Rs. 4.9 billion loans obtained from nine banks in 1994-95.

Interior Minister Rehman Malik told the Sindh Assembly on February 21 that the government would approach Interpol to arrest former president Gen ® Pervez Musharraf in the murder case of former premier Benazir Bhutto.

Pakistan Tehreek-e-Insaf (PTI) Chief Imran Khan on February 21 strongly criticized the passage of the 20th Amendment, saying it was a complete fraud and worst kind of horsetrading.

US State Department on February 21 expressed the administration’s disagreement with a Congressman’s controversial resolution espousing the right to self-determination of the people of Balochistan and said that United States respects the territorial integrity of Pakistan.

Addressing a press conference from Switzerland on February 22, Baloch Republican Party Chief Nawabzada Baramdagh Bugti rejected the proposed all-parties conference on Balochistan issue and said Baloch people would not negotiate on anything less than independence of Balochistan.

Gilani government has distanced itself from the amnesty announced by the Interior Minister Abdur Rehman Malik on February 23 for the angry Baloch leaders. PM Office is reported to have categorically said that the decision announced by the interior minister could be his own but not of the government.

March 2012

N ational Briefs Pak economy last month Effective February 1, 2012, prices of petroleum products were increased while the Petroleum Ministry also imposed a 10 percent surcharge on CNG prices.

Liquefied Natural Gas from the Gulf state.

potential to produce 350 tons LPG and 286 million cubic feet gas per day.

The Federal Board of Revenue on February 6 announced reduction in GST from 16 percent to 5 percent on import and supply of agriculture tractors.

Directorate General Intelligence and Investigation (DGI&I) of Federal Board of Revenue (FBR) , Karachi has detected tax discrepancies to the tune of Rs. 1.5 billion approximately, in the ledgers of 213 registered units.

On February 7, textile industry demanded of the government to delay the proposed MFN status to India as the deal will be harmful for the local industry following current energy crisis in the country.

Industrialists and traders have reacted sharply to the increase in oil prices as it would put additional burden on poverty-stricken people of Pakistan.

The World Trade Organization’s Council on Trade in Goods on February 1, 2012 unanimously approved the European Union waiver on duties allowing duty-free import of 75 products from Pakistan.

In an interview with China’s People’s Daily Online, President Asif Ali Zardari has stressed the need for Pakistan and China to deal with the world economy together and act in accordance with the new global demands. With the world settling in new situations, Pakistan and China need to find new comfort zone for further collaboration.

The Fiscal Policy Statement 2011-12 has pointed out that power sector subsidies amounted to 1.9 percent of GDP in fiscal year 2011 and it shall be even higher in FY 2012. For the first time in country’s history, the domestic debts and liabilities have crossed Rs. 7 trillion mark mainly due to rising fiscal deficit and a shortfall in the revenue collection coupled with high expenditures on security.

On February 7 Managing Director, PIA informed the Senate Standing Committee on Religious Affairs that PIA will buy about 12 new aircraft to replace the old fleet which has completed its life.

Pakistan will export one million tons of wheat and 200,000 tons of rice to Iran and import fertilizer and iron ore from Iran under barter trade system as agreed during a meeting held between Federal Minister for Water and Power Syed Naveed Qamar and the visiting Iranian Deputy Commerce Minister Abbas Ghohadi.

National Assembly on February 8 approved SBP Amendment Bill 2011 designed to make it mandatory for the government to retire borrowing from the central bank at the end of each quarter.

IMF has proposed the government to make another attempt to introduce reformed general sales tax (RGST) and reduce subsidies on wheat and fertilizer to limit budget deficit at 5.7 percent of the GDP. On February 24, Pakistan paid to IMF the first instalment of 258.4 million SDRs (dollar 399 million) of Stand-By Arrangement (SBA) – a long term soft loan taken in November 2008 to avoid any default.

The IMF on February 6 warned Pakistan over its widening fiscal deficit and slow growth saying the economy remains deeply at risk to both internal and external shocks.

A UK mining and power generating company plans to invest up to $ 610 million in Thar coal-mining and power generation with a projection of starting coal production of around five million tons per annum by 2014 and initial power generation of 300 MW.

Pakistan and Qatar on February 6 signed agreements to collaborate in multiple areas with focus on import of

OGDCL has started Liquefied Petroleum Gas production from Kunnar Pasaki gas field which has the

12

Violation of Public Procurement Rules 2004 in multi-billion dollar tender for the contract for LPG/NGL extraction project in Kunnar-Pasaki field would cause a loss of $46.7 million to the government exchequer.

On February 11, Pakistan and Sri Lanka signed three MoUs to promote cooperation in trade, technical education and media and agreed to enhance bilateral trade from current $370 million to $2 billion.

FBR increased federal excise duty rates on domestic and international air travel by Rs. 40 and Rs. 100 respectively from January 20, 2012.

Foreign investors are rapidly transferring their earnings on investment abroad. Latest statistics of the SBP revealed that foreign investors repatriated some 534 million dollars on account of profit and dividend during July-Jan of fiscal year 2011-12.

WAPDA on February 16 signed an agreement worth Rs. 611.5 million for preparation of detailed engineering design and tender documents of Munda Multipurpose Project.

Iran has offered Pakistan 80,000 barrels per day crude oil on deferred payments as well as $250 million loan for the construction of Iran-Pakistan Gas Pipeline Project Inaugurating a conference on Islamic business organized by Riphah International University of National Institute of Banking & Finance, Governor, State Bank of Pakistan on February 28 underlined the need for Islamic banks to offer agriculture financing to tap the huge productive potential of the sector.

Keeping in view the global crude oil prices, OGRA has calculated expected increase of up to Rs. 8.67 per litre in POL March 2012

E ditorial Currency swaps: their implications for the US$

T

But the more worrying agreement for the US is the one that China entered into with UAE since the list of countries with which China is signing such deals is slowly and steadily growing longer; the deal with UAE is the first with a member of the Gulf Cooperation Council.

Last year, China’s bilateral trade with UAE was in the range of $36bn, with Chinese exports accounting for two-thirds of the total bilateral trade. January’s currency swap agreement is only for US$ 5.5bn. China, it appears, is providing businesses ‘seed money’ so that they won’t have to ‘dollarize’ every deal – a kind of trap to get used to living without the US Dollar.

Western observers are of the opinion that UAE businesses are being ‘sensitized’ about the Chinese currency’s role to get them used to accepting it as a reserve currency for the UAE. Given the level of its imports from China, for UAE, stocking the mighty Yuan could become one of the safest things they ever did since appreciation of the Chinese currency is certain.

To these market observers, the currency swap between UAE and China is China’s statement of intent to boost its ties with the UAE, which has historically been a ‘pocket borough’ of Britain in the Middle East. But what the US and Britain find more worrying is the fact that China has bigger plans focusing on UAE’s oil resources because Abu Dhabi holds over 7 percent of world’s proven oil reserves, and therefore will stay a large importer of Chinese goods.

More importantly, besides being a large oil exporter, in 2014, UAE’s existing oil concessions to Western oil companies will be due for renewal. By building its relations on solid grounds well before 2014, Chinese companies could rise to a position where they could give Western oil companies – Royal Dutch Shell, ExxonMobil and Total - a tough competition.

Although UAE is a tough market where the western business culture is well-entrenched but to misread the Chinese intent would be expensive since the same Western business culture has also made the Arabs overly concerned about profit, not so much its sources.

By slowly but surely expanding its presence in oil-rich states of Africa, China is tiptoeing into the dazzling world of petro-dollars. On the other hand, it is fast becoming an industrial economy that has plenty to export. To sustain this posture, it needs to recycle its high export earnings strategically to ensure that its industries are not short of energy. It is not difficult to conjecture what Beijing intends to achieve via this swap deal with the UAE. The key problem for the West is that GCC currencies are pegged to the US Dollar and their huge earnings are, by and large, ploughed into bank vaults in London or New York or used to acquire assets such as US equities and Treasury Bills provided they aren’t invested in the Chinese Yuan and then parked in Beijing, not New York or London.

he ongoing global economic crisis is going to have implications not just for the financial services sector and the perception about sovereign debt but also for all reserve currencies–US$, the Euro and the British Pound – in trouble in terms of their image as reliable reserves of value.While financially distressed countries like Pakistan (on IMF’s life support systems) are pushing for currency swap arrangements with their major suppliers to avoid the role of the US in settling foreign trade, countries that are not distressed are also doing the same because they have realised that Western currencies are no longer a safe reserve of value for them.

Two recent developments in this context are significant; they foretell what may gradually become the new order–one that excludes the US$. In January, UAE and China have signed a currency swap agreement for an initial amount equal to US$ 5.5bn and India has reached an agreement with Iran whereby it will pay to Iran for its oil in gold.

India is the first buyer of Iranian oil to pay for it in gold, and thus eliminate the US$ from this trade. It is also believed that China will follow suit. Together, India and China buy about a million barrels a day, or 40 percent of Iran’s total exports of 2.5 million barrels per day. Both are superpowers in terms of their holding of gold assets. The vast sums involved in these imports are expected to boost the price of gold and depress the value of the dollar on world markets.

By paying for oil imports in gold, India and China could help Iran bypass the upcoming freeze on Iranian Central Bank’s assets, and embargo on importing Iranian oil that EU foreign ministers agreed to impose on January 23.

Together, the EU states currently buy around 20 percent of Iran’s oil exports.

Loss of the volumes that EU embargos imply could partly be compensated by Indian and Chinese initiatives. The second largest importer of Iranian oil after China is India; it imports approximately US$ 12bn worth of Iranian crude – roughly 12 percent of India’s consumption. To work out details of this new payment arrangement, a high-powered Indian delegation visited Tehran in mid-January to examine the viable options following the new sanctions imposed on Iran.

While any reference to gold as the medium of payment was avoided, the two sides reportedly agreed that the payments for India’s import of oil would partly be in the Japanese Yen and partly in Indian Rupees. But insiders still insist that gold is included in the mix of the sources of payment to Iran.

India will henceforth route its Iranian oil imports through two of its state-owned banks: the Calcutta-based UCO Bank, whose board of directors is made up of representatives from Indian government and the Reserve Bank of India. The third bank to be used by India is Halk Bankasi – the seventh largest Turkish bank that too is a state-owned bank. In a way it is a secure government supervised network.

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March 2012

E ditorial A grand fiscal failure and what it foretells

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seek the details of how the borrowed funds were spent, how did their outlay help the economy, and how the regime plans to repay them to bring down the fiscal deficit as a proportion of the GDP. Parliamentarians are also oblivious to the fact that bulk of this huge pile of debt accumulated by the regime is short-term – a profile that is placing the state on the verge of default almost anytime.

Parliamentarians either can’t see or are aware of it but won’t speak about it. The fact is this profile of public debt is a way to ensure that no political party dares think about replacing the in-power regime. But what the opposition can’t afford to overlook is that the country is drifting towards insolvency. As and when that tragedy surfaces, they will fly off to their heavens abroad and the masses, whose future they all vocally claim to be protecting, will bear the brunt. Despite all this, they insist on the immunity of the state’s ‘officeholders’.

The only remedial plans (that have surfaced thus far) are that the regime plans to raise $0.5bn by floating Euro bonds and another $0.5bn from floatation of Sukuk bonds. The regime also hopes to collect the remaining $0.8bn (due for the past four years) from privatization of PTCL, and sell 3G telecom licenses for another $0.8bn. But success in floating bonds in a global recession is highly optimistic.

Even if the results of the government’s plans to mobilize the required external resources succeed they will amass $2.6bn or just 20 percent of the required $12bn in 2012. The estimate of external deficit is based on the cumulative effect of likely trade deficit of $18bn (if exports don’t fall below $23bn and imports don’t exceed $41bn), scheduled servicing of external debt amounting to $7bn (including $1.4bn payable to IMF), and inward foreign remittances not falling below $13bn The answer to where from will the remaining needed foreign funds be coming is unclear. This critical issue, which is being raised repeatedly by the SBP (and often mutedly by Federal Finance Minister), doesn’t bother the parliamentarians which reflects what their priorities are. Sadly, what takes the better of their senses is politicking, not vociferously demanding the correction of clearly developing distortions in the economy.

In the last four years, the parliament did not force the regime to adopt austerity, cut fiscal deficit, ready loss-making state-owned entities for privatization and inculcate saving-efforts aimed at boosting the investment sentiment to drive growth.

This scenario would require seeking re-scheduling of external debt, but given its track record (failure to impose VAT and tax the agriculture sector), the regime will have a weak case before potential external lenders. What IFIs think of the regime is portrayed by IMF’s reluctance to issue its Letters of Comfort to other IFIs to assure them about Pakistan’s ability to effect on time its repayments in the years to come because the damage being done to Pakistan could be long-lasting.

n January, the State Bank of Pakistan (SBP) disclosed some startling facts about the relationship between tax revenue and public debt servicing. According to its data, by end of FY-11, at Rs 1.475 trillion, public debt servicing reached 90 percent of tax revenue. This meant that compared to Rs1.078 trillion in FY-10, in FY-11 debt servicing shot up by 37.2 percent.

The worrying part of the scenario was that the hike in public debt was largely funded by bank borrowing. While this shift has helped in cutting borrowing from SBP, and has softened IMF’s criticism, it will fail to contain Pakistan’s key problem – high inflation. With falling economic activity and resultant supply shortages of a wide variety, consumer prices will keep rising. Worse still, with reduced GDP and higher public debt, fiscal deficit will grow much larger than 6.4 percent recorded in FY10, which will have a devastating impact on Pakistan’s risk perception.

The scenario confirms that the rapid economic slide is being driven by far lower credit availability to the private sector, its lower output, ongoing business closures, the resultant supply shortages, higher unemployment, sliding investor confidence but, above everything else, reflects on the short-sightedness in fiscal management by the in-power regime that will have far-reaching consequences for the economy.

Squeezed liquidity of the banking sector continuously obliges SBP to inject liquidity into the system as is being reported by the media. Consequently, SBP continues to fund the public debt though now it is via the banking sector. Even if covert funding of the public debt by the SBP is to be disregarded, public debt isn’t delivering much in terms of adding value to the economy. The energy crisis alone proves that the state is mismanaging the economy.

This high debt is not even repairing, let alone expanding the physical and social infrastructures to afford the economy key sustainable operational efficiencies that may help increase its productivity as well as job-creation capacity to employ the millions that are added to Pakistan’s population every year, courtesy its high population growth rate. This confidenceshaking dilemma is raising a variety of questions.

The conflict–higher public debt and falling growth–gives rise to suspicions about the integrity of the regime. What turns all such suspicions into belief are the disclosures about waste of tax revenue and its being pocketed by the high and mighty in the regime, the latest of them being that salaries and benefits paid out to “ghost” employees in various departments of the provincial government of Sindh amounted to Rs 10 bn in the last fiscal year.

In spite of the damage this mismanagement is causing to the economy, this malaise is rarely discussed in political circles.

Parliamentary opposition is as dismissive of this developing disaster, and has still not sought a debate on this subject to

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March 2012

E ditorial Celebrations or protests – loss of economic activity pays for them

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f the many self-inflicting traditions that democratic regimes love to pursue, one is to freeze economic activity, be it a day to celebrate an event or express anger at an historical event or a recent incident. How this culture will help economically stressed Pakistan is a question that no politician or aggrieved party is willing to answer. So much for their self-proclaimed patriotism! The latest example thereof was set by the Baluch leadership to express their resentment over the killing of the wife and daughter of a Baluch Sardar and political leader in Karachi.

Undoubtedly, it was a very unfortunate incident; the killing of the innocent must be condemned in the strongest possible terms because it is an unpardonable sin, and those perpetrating such crimes must be brought to justice. If that isn’t done, it will induce more to commit such crimes – a tragedy that is bleeding Pakistan, day in day out.

Having said that, it is equally important to point out that the fact that economic activity in many parts of Baluchistan was frozen for three days at a stretch could not serve the purpose of identifying the culprits of this crime. In fact, this reaction never achieves that objective. The only purpose it sometimes serves is to awaken the sleepy administration to the need for rounding up the culprits.

But it does reflect two things fairly clearly: the apathy of the administration that forces people to prod them to meet its obligations, and the high cost involved in such a wake-up call.

But should an administration under a self-professed peoples’ regime require such prodding, and should the cost of waking up be so high? Even if you disregard the economic cost of it, the mere fact that, for three days the daily wage-earners earned nothing to support their existence as well as those of their dependents is hugely deplorable. And, most probably, those who had to starve for three days didn’t pray to God to bless the departed souls. Who then got the benefit of this form of protest?

Such events, that have grown in number since the incumbent regime took power, reflect sheer blindness to ground realities of Pakistan–falling economic activity, supply shortages of a wide variety, and rising unemployment and poverty. The loss of each day’s economic activity adds to this self-damaging set of trends but to the politicians who appear to place economy at the lowest priority, it matters not. In spite of this profile, they all claim their right to lead the nation, God alone knows where to.

Another peculiarity of the economic activity freezing protest in Baluchistan was that also exposed a visible ethnic mindset; when Pakistanis from the other provinces are killed in similar tragic ways such prolonged protests are not witnessed. What this partial treatment depicted was an acute sense of neglect among the Baluch. That feeling has a valid basis but there is plenty more that is often (and conveniently) overlooked by our Baluch brothers; it has to

do with the attitude of their leaders towards their own role in minimizing this feeling of neglect. It is well known that Baluchistan has huge reserves of natural resources–gas, oil, and metals–that must be pulled out of the earth to translate them into productive input for the industry and thus create job opportunities for the Baluch youth to put them and their future generations on track for a better, more satisfying future. Acts that discourage efforts to explore and mine these natural resources hurt Baluchistan and its people.

From the look of things, all the Baluch leaders have done so far is to frighten natural resource exploration companies; it is bad for Baluchistan and Pakistan. It is tragic that, instead of making it possible for these companies to pull out the wealth buried under the ground and ensure that the effort provides Baluch youth maximum job opportunities Baluch leaders did the opposite, and laid the blame therefor on the federation.

To achieve these benefits to the maximum, what the Baluch leadership needed to do was to encourage investment in this sector, become business partners therein, and prepare Baluch youth to justify employment therein on the basis of merit; all this required, to begin with, demanding from the federation more widespread and cost free facilities for basic education and vocational training to prepare a huge workforce of truly skilled youth. Sadly, such a demand, which could be the most worthwhile effort, is virtually never heard of.

Neither do the Baluch leaders demand this of the federation nor do they do anything about it themselves. All they do is to incite divisive feelings, which is hurting Baluchistan no end. The Baluch politicians rarely thought about what they could do besides pointing fingers at the federationusing their huge stocks of wealth for building schools, colleges and vocational centers to prepare a skilled workforce that, over time, could takeover virtually every responsibility in resource exploration and mining ventures, and deliver results at par with the best.

We are yet to hear about schools, colleges, hospitals, etc., built by Baluch leaders to visibly manifest their solid commitment to giving the Baluch youth a better future.

This is in spite of the fact that such efforts continue to be made in all the other provinces. Instead, what we hear are shocking stories about people being asked to walk over burning coal to prove their integrity, revenge killings, gross mistreatment of women, and private prisons–all having the sanction of Baluch leadership. Is this what leadership must deliver?

The tragedy is that by their attitude and approach to politicking, politicians simply deny the critical importance of sustaining economic activity above all other considerations, more so in view of the fact that an over-indebted and poverty-ridden Pakistan cannot afford to lose out on even one day’s revenue as clearly visible from the mounting fiscal deficit.

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March 2012

E ditorial Sharmeen Obaid Chinoy— First Pakistani to win Oscar Award

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harmeen Obaid Chinoy created history on Sunday, February 26`, 2012 as she became the first and the only Pakistani to have won the Oscar Award–the world’s most prestigious entertainment award--for her documentary “Saving Face ,” in the short documentary category. The 52-minute documentary, co-directed by US-based Daniel Junge, is about the tragedies caused due to acid attacks – a brutal vice that victimizes thousands of women in Pakistan and elsewhere in the world – and the doctors and social workers who help them recover. In Sharmeen’s words, “The documentary is a story of hope with a powerful message for the Pakistani audience and a great way to show how Pakistanis can help other Pakistanis overcome their problems.”

For Sharmeen Obaid Chinoy, the award becomes all the more important and rewarding because she had never had a formal training in filming documentaries; she learnt it all on the field.

The incidents of acid attacks, particularly in Pakistan, are not uncommon. Studies show that there are more than 100 reported cases of acid victims in Pakistan every year. The actual number of the sufferers may be even greater. The affectees are mainly women and girls who are disfigured, blinded or their scar tissue having been infected with septicemia or gangrene. According to a survey conducted by Thomson Reuters Founation, Pakistan is the third most dangerous country in the world where women are the victims of acid attacks either by their husbands for punishing alleged transgressions or others for turning down proposals for marriage, the first two being Afghanistan and the Democratic Republic of Congo.

The documentary traces the lives of the victims of acid attacks and chronicles the work of a British Pakistani surgeon Dr. Mohammad Jawad who came to Pakistan and performeds reconstructive surgery giving new lease of life to the survivors of the attack. The women who decided to be a part of ‘Saving Face’ did so because they wanted to make their voices heard and to bring world attention to this form of assault, said Chinoy in an interview before the announcement came that she had won the Oscar award. She said, she hopes her film will resonate for others in Pakistan.

Sharmeen Obaid was born in Karachi, studied at Karachi Grammar School, graduated from Smith College with a bachelor of arts in economics, and completed two master’s degree from Stanford University in International Policy Studies and Communication. She has always had a flair for investigative journalism.

When she was in her teens, she wrote an article for a local newspaper investigating into the atrocities and illegal activities of the rich landlords. On, she won a plethora of prestigious awards.

Sharmeen began her career in documentary-making when she was saddened to see the pitiable plight of the Afghan refugee

children in Pakistan. She decided to create film portraying the affictions of Afghan refugees and to accomplish her mission she applied to Smith College as well as to New York Times Television production division for financial grants.

Impressed by her zeal and mission, both the organizations gave her funds as well as production equipment and training. Thus she came up with her first documentary entitled “Terror’s Children” which was so touching and so inspiring that it won her the Overseas Press Club Award. The film focused on the lives of Afghan refugee children following the U.S. attacks. From then on she has continued to move forward winning the American Women and Radio and Television Award, and several others.

In her 10-year career in the field, Sharmeen has already produced 13 documentaries on conflict situations. In 2003, her film on Reinventing the Taliban was awarded the Special Jury Award at the BANFF TV. In 2005, her film on “Women of the Holy Kingdom”, her investigative piece on women’s rights in Saudi Arabia, won the South Asian Journalist Association Award. The year 2006 saw her taking on the Catholic Church in the Philippines in “City of Guilt”. In 2007 she travelled to Afghanistan and reported for Channel 4 and CNN. She produced her film, Afghanistan Unveiled/Lifting the Veil which focused on stalled reconstruction and the repression of women in the country. She was named “Journalist of the Year” and given One World Media award. In 2010, she won an international” Emmy Award” for her documentary on “Pakistan: Children of the Taliban”. The film explored the strategies the Taliban used to recruit the young and often the dejected populace, and the mthods they used to entice and radicalize them. On 26th February 2012, she became the first Pakistani to ever have won an Oscar for her documentary “Saving Face” which highlights the plight of the women in Pakistan becoming the victim of acid burns on their faces that occur as a result of male domination.

Overwhelmed by her achievement, she dedicated the coveted award to “all the heroes working on the ground in Pakistan and to all the women in the country who are working for a change.”

She admired surgeon Mohammad Jawad for his relentless work on rehabilitating the acid attack victims and Rukhsana and Zakia, , the main subjects of the film, for their resilience and bravery in the face of such adversity.

In his message President Asif Ali Zardari felicitated Sharmeen Obaid for winning the award and appreciated that she highlighted a sensitive topic with utmost sensibility and creativity.

Prime Minister Yousuf Raza Gilani also congratulated Obaid Chinoy on her achievement and announced conferring a high civil award on her. For Sharmeen, this would be an honor, well deserved and well earned. hopefully, this might inspire other talent for similar pursuits.

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March 2012

P olitics What 2012 holds in store for Iran

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reputation he carries is not entirely spotless when it comes to dealing with dissent. But his representing a democracy is not in any doubt. Recent analysis of public opinion in the US is supportive of this fact besides reflecting a deeply ambivalent attitude towards Iran, with the majority favouring diplomatic solutions.

Yet, as Republican presidential candidates, most of them Israeli lobbyists, are exploiting the issue, and depending on how the Iranians manoeuvre the nuclear issue ahead of the US polls, it is possible that, courtesy Israeli lobbies in the US media, American public opinion may be influenced.

While this time bogeymen like Bush and Blair are the driving seat, the Republicans and the pro-Israeli media are doing all they can, to pressure the US into joining Israel’s invasion of Iran. The drumbeat of that war is growing steadily. Each day begins with reports about another failed UN inspection of Iran’s nuclear facilities, fresh doubts that IAEA is creating (as about Iraq in 2003), news about deeper US Navy accesses into the Strait of Hormuz, assassinations of Iranian nuclear scientists and evermore hurting economic sanctions on Iran.

Iran, on the other hand, is doing no less. Reports on missile tests, warnings about Iranian retaliation, and forecasts that if Iran is attacked it would lead to WW-III, keep pouring in day in day out.

Visibly, the world is sliding towards catastrophe. To Tehran, this scenario appears like “Iraq in count down to the 2003 invasion” and breeds evermore defiant rhetoric on the part of Iranian leadership.

This Israeli inspired madness may lead to WW-III, given Western subservience to Israel.

The ordinary often wonder why is the West so vulnerable to Israeli pressure? Well, it isn’t hard to understand; European politicians (e.g.

George Bush, Tony Bush, Nicholas Sarkozy, and Silvio Bureconi) are the types that carry a huge baggage of misdemeanours that the Israelis keep tracking to discover their weaknesses and then threaten to blackmail them with if they don’t do what that the Israelis ask them to do. Besides, Europe also can’t forget what the Jews went through in the concentration camps of the Axis powers, especially German, during WW-II; nobody knows how much of that is true, but pro-Israeli media very cleverly saddled most Europeans with an exaggerated sense of guilt about this travesty perpetrated on the Jews.

Western regimes, and the less reckless sections of their media are worried about the damaging consequences of a war in the Strait of Hormuz for their dear allies–Saudi Arabia, Bahrain, Kuwait, Qatar and UAE–but far more about the impact of even temporary (taking an optimistic view of the conflict that could prove devastating) suspension of almost 35% of global oil supply that could badly hurt Western economies. It is not ethical considerations that are forcing the West to goad Israel into taking a less reckless approach to decapitating Iran.

Despite the US pressure (ethical or unethical) to refrain from attacking Iran, the current media estimates suggest that Israel may opt for an attack on Iran either in April or June 2012.

ith its clout in the global media, Israel is desperately trying to build a case for a US-backed invasion of Iran–a madness that reminds us all of the days leading up to the US and its allies invading Iraq. But as of now, consensus in the Western circles is that while Iran is seeking the nuclear capability, it doesn’t yet have an atomic bomb nor is it currently trying to build one.

Last week, Ayatollah Khamenei very emphatically said that nuclear weapons were “useless and harmful” and to possess them was sinful.

Citing unnamed US officials, The New York Times reported that US intelligence analysts believe there is no hard evidence of a concerted Iranian effort to build a nuclear bomb. As per this newspaper’s sources, in their latest risk assessments (as they did in 2007), 16 US intelligence agencies concluded that Iran has abandoned its nuclear weapons programme. This is despite an International Atomic Energy Agency warning that it continues to have “serious concerns regarding the military dimensions to Iran’s nuclear programme.”

For a change, US intelligence agencies are acting far more rationally than they did in 2003 before launching the invasion of Iraq. Intelligence agencies and independent analysts are of another view–Iran seeks to enhance its influence in the Gulf region by creating what they call a ‘strategic ambiguity’ about its nuclear intensions. Rather than building a bomb, Iran may go for increasing its power in the region by sowing doubts among its neighbours about its nuclear ambitions.

That said, the Israelis–victims of a divine affliction that has taken away from them the gift of reason–still insist that they know what no one knows. That’s why, despite the Western doubts, a decisive moment will be when President Obama is confronted by Israel’s prime minister, Binyamin Netanyahu, on March 5, in Washington while on a visit to the US. To Ari Shavit, an Israeli columnist "the meeting…..will be definitive. If the US president wants to prevent a disaster, he must give Netanyahu iron-clad guarantees that the US will stop Iran in any way necessary and at any price, after the 2012 [US] polls. If Obama doesn't do so, he will “obligate” Netanyahu to act before the 2012 elections." Just note the term “obligate”; it reflects the Israeli mindset. The world is “obliged” to them.

This hard Israeli line is clearly defiant of the fact that the case about Iran's nuclear programme is far from proven. There is West-wide agreement on the fact that limited military strikes on Iran won’t work; a more extensive, longer-lasting invasion is required, given Iran’s might that it developed over decades after the fall of the Shah, without any Western support. Also, Obama, who has tried hard to finish the wars in Afghanistan and Iraq, is not the US president who could be interested in starting another war.

The other fact is that, unlike Saddam Hussain, Ahmedinejad is seen as a popularly elected prime minister even though the

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March 2012

P olitics Western worries over Iran-Israel conflict

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here is consensus in the West that Iran has to be tamed; it has the disqualifications that warrant its being bashed–it is ideological, meddles in the affairs of its neighbours (i.e. Syria, Lebanon and Gaza), and is trying to acquire nuclear weapons to pose a threat to Israel and thus dilute the clout Israel now has over the Middle East. More importantly, Iran’s acquiring nuclear weapons would legitimize demands of Muslim states –Saudi Arabia, Egypt and Turkey to go for nuclear weapons. Above all, the West doesn’t want anything to hinder the free flow of oil from the Persian Gulf to Europe and the US. What the West prioritizes is securing its interests, but to Israel that vital interest has secondThe West ary importance. Once again wants to secure (as in the 1956 conflict over Canal) the US and Israel its interests but Suez perceive things entirely differfor Israel it is ently. In 1956, Israel (in spite its second priof its support by Britain and France, both ravaged by ority. For the didn’t have the clout first time (as in WW-II) it now enjoys i.e. nuclear and the conflict other lethal arms. Israel is therefore not interested in over Suez to the advice the US Canal in 1956) listening and EU member states are the US and offering.

Israel perceive Western spy networks (about whose strategic “lying” abithings differlities Israel knows more than ently. anyone else in the world) have been denying Israeli intelligence reports about Iran being within a year of assembling at least four nuclear bombs, and given its successes in developing missile technology, Iran could bomb every state in the Middle East, especially Israel. The Western intelligence agencies also reject the possibility of permanently destroying Iran’s ability to develop nuclear weapons. But, for Israel the worrying part the frightening statements by the Iranian leadership, for instance, the remarks by Ayatollah Ali Khamenei that a “Zionist regime is a cancerous tumour that must be cut out.”

Western regimes are also convinced that attacking Iran won’t be as simple as was the Israeli attack on Iraq’s Osirak reactor in 1981 or the one on the Syrian reactor in al-Kibar in 2007. Iran’s nuclear reactors are spread all over the country many of them hardened against expected air strikes, and so would require repeated air strikes. Besides Iran’s nuclear know-how (its knowledge base and its scientists) can’t be bombed out of existence.

A wholly stunning recommendation by a top-ranking British journal is that the US should bomb Iran every 5 years. As of now, Iran lacks adequate air defence capacity, though it has a sizeable stock of missiles that it could use in retaliation, but only once. So, in the first bombing raid, Iran’s capacity to re-build them must be destroyed. Bombing Iran’s new nuclear outfits periodically would then be easy. But the Afghan and Iraqi experiences show that aerial strikes (including by drone) don’t deliver the desired aims even after decades.

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The Western regimes think otherwise, for economic reasons. If after the invasion, the Strait of Hormuz is rendered unfit for navigation by vessels (God knows for how long) oil price would skyrocket, and drastically slow the economic recovery besides crippling the Gulf Arab states. Given the mass anti-state movements now hurting almost all Western economies, courtesy the economic recession, things may go well beyond the control of the regimes in these states. Besides, Iran could retaliate not just on the battle front, but the terror groups it backs–Hammas & Hezbollah–could launch a campaign to hit vital Israeli, US and European targets almost anywhere. And, even if the US stays firmly on the sidelines during an Israeli invasion of Iran, it would be impossible to dispel suspicions over its complicity therein due to its Israeli proxy image.

The US and EU therefore favour imposing stiffer sanctions to bring the Iranian regime down to its knees by provoking a popular movement for its exit because, as things stand now, the West believes it has no option to overcome the Iranian problem except by occupying Iran in order to over-throw the sitting regime, as done (at a wholly crippling cost) in Iraq. America, sitting on a $16 trillion mountain of debt, is in no mood to go for that option, at least until March 5, when the Israeli Prime Minister meets president Obama in the US. One thing starkly clear is the poverty of vision in the West. It can’t think of a sane, rational and fair way of dealing with the non-whites, in particular, the Muslim states because it suffers from the deadliest of all diseases–racism.

No US regime ever considered the possibility of befriending Iran in spite of what the US did to Iran after its protégé–the Shah was booted out on charges that were undeniable. Then Iran showed its strength even in sheer adversity by defeating another one-time US protégé – Saddam Hussain–to prove to the world what the Iranian nation is capable of; the sensible course for the US was to reach an understanding with Iran, not try to make it a global pariah.

The most unfortunate aspect of Western diplomacy is that it rarely stands for justice; instead of doing that, it depends on its media to portray its injustice as the right way of resolving an issue. But this trick won’t work anymore; “you can fool all the people for sometime but for all the time.”

China, India and Russia won’t toe the Western line; this has shown the West the limits of its genius. These powers won’t allow a free hand to the West or Israel in this conflict. To them a sanction-crippled but intact Iran can be the source of cheapest oil, which will sustain their competitiveness.

March 2012

C over Story PSDP – sadly, the easiest head to chop

by A.B.Shahid

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midst growing economic chaos and the instabilities that are looming large over various sectors of the economy, comes a new slogan: “New Growth Framework” of the government. Who would not like to welcome such a strategy when every sector is desperately looking for solutions to its problems but the fact that the regime has failed to deliver virtually anything in the past four years fosters nothing except doubts about sincerity of intentions behind this slogan.

The reason for such doubts is the optimism expressed by the Planning Commission (PC) in its latest report about what went on in 2010-11. As per the report, PSDP programme delivered on its objectives. It gave the country projects in key sectors: energy and irrigation systems, highways, universities, airports, hospitals, schools, and basic health units, etc.....and the evidence of PSDP's successful completion of projects is visible in almost every corner of Pakistan. Did we really see this “evidence”?

Having celebrated its success, the PC goes on to list major obstacles to infrastructure development that include: • political and bureaucratic pressures that drive up the stock of PSDP projects, • project appraisal rules that are often set aside due to weak planning processes along with “stakeholder” pressure, and limited capacity [for effective supervision], • pressures built by the escalating fiscal deficit that leads to cutting the outlay on PSDP [as the easiest way out?], • project managers' personal interests (low allowances coupled with excessive control over resources) lower the project quality and their timely completion, • project sponsors support [limited to] brick and mortar and purchase of equipment as evidenced by the fact that many universities were set up without arranging adequate faculty availability, • current expenditures do not provide for maintenance costs of the projects with the result that people don’t get optimal benefits while the projects are operational, and as a result • the projects depreciate at a faster pace than they should.

These conclusions are indeed based on facts, though the soft terms wherein the facts have been recorded, doconvey the full extent of the mismanagement that goes on unabated. In particular, it doesn’t expose the biggest flawcorruption-that has been the key cause of resource shortfall besides the fact that allocation of the PSDP has consistently gone down since 1990. This trend is the main contributor to our current economic plight.

If the regimes in power since 1990–democratic and military–had invested in just two sectors viz. energy and power, rise in the productivity and profitability would have induced private investment in every other sector. A huge side benefit thereof could have been that foreign investor faith would not have been eroded, and resource shortfalls created due fiscal pressure would not have resulted in the many deficiencies that now cripple the economy as a whole.

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Continued neglect of PSDP utilization vs. allocation critical infrastructure needs, is inducing business closures and flight of capital, let alone inflow of foreign capital.

According to the above graph the actual overall PSDP size in 2010-11 was 7% below that budgeted for 2007-08, 27% less than the budgetary allocation in 2008-09, and 17% less than that budget in 2009-10 while 2010-11 closed with the largest cutback of almost 32 percent.

This is not the setting for achieving economic growth that is commensurate with the rise in the country’s population.

The setting unmistakably portrays both incompetence and a lack of vision in the regimes, the worst of both in the incumbent regime. The latest disclosure by Transparency International about PIA buying five Boeing 777 aircraft at a massive (275%) premium over the market price is an indication of how those who justify slashing the PSDP to meet fiscal deficits, first go about creating these deficits, obviously for vested interests.

The other issue that needs re-examination is the continued transfer of higher PSDP funds to the provincial governments, hoping that the funds would be utilized effectively.

The fact is that besides project managers' personal interests, that the (PC) has listed among factors responsible for low productivity of the PSDP funds, the influence of the local politicians escalates resource waste and frauds that hurt project quality, and their timely completion. The other issue that needs as much, in fact more investigation, is the project supervisory capacity residing in the provincial bureaucracies. Experience shows that due to these factors i.e. interference by politicians and limited supervisory capacities, projects that were supervised by a provincial supervisor were completed with delays since resource allocation was wasted at much faster pace, compared to projects supervised by federal government, in spite of its weaknesses in this vital area.

In spite of all this, the National Finance Commission award, together with the 18th Amendment, envisages even greater financial autonomy for the provinces in respect of the share of the revenue from the Share of provinces in PSDP funds divisible pool and allocations for the social sectors. But, it is unfortunate that to-date, none of the provinces has made any effort to either support social sector development, or to build capacity to run the devolved social sectors efficiently, the March 2012

C over Story thereof being the health sector in which there were country-wide protests over the transfer of hospitals until now supervised by federation to provinces.

Talking about capacity, the PC takes pride in the fact that projects are being approved at a fast pace due to pressures.

An indication thereof is that 216 proposals amounting to Rs 1.085 trillion were examined between mid-October 2010 and mid-April 2011(i.e. just six months), and 192 projects for Rs 985 billion were approved implying approval rate of 91% (of the amount, not the number of projects).

Indeed, we need to speed-up the approval process to hasten development, but were all the projects scrutinised in depth and passed the tests they should have passed? If that was the case, subsequently, why experts expressed doubts about such checks, and Transparency International faulted the pricing of the projects as well as the terms on which tenders therefor were awarded?

Central Development Working Group (CDWP) is an august group of experts. Surely, it knows more about optimizing the value to be generated by every penny invested in the PSDP. How is it then that instead of adding to the electrical power-generation capacity of the country via its cheapest mode i.e. dams, it kept postponing the construction of Kalabagh dam year-after-year? How many CDWP members resigned citing political interference as the reason therefor?

Budgetary allocation and utilization of PSDP (Rs bn)

Fiscal Year

2005-06 2006-07 2007-08 2008-09 2009-10 Total

Projects % Cost Escalation 47 Islamabad-Peshawar Motorway 193 Lowari Tunnel Widening & Improvement of N-85 49 Repair, improvement, widening of KKH 67 Railways Track Rehabilitation Plan 14 Procurement of 69 D.E. Locos 0 PhD Fellowship for 5000 Scholars 0 Family Planning & Primary Health Care 415 Expanded Programme for immunization 392 Raising the Mangla Dam (inc. resettlement) 62 Mirani Dam 0 Greater Thal Canal (Phase-1) 0 Kachi Canal 0 Lower Indus Right Bank irrigation, drainage 235 235 109 Right Bank Out fall Drain from Sehwan to Sea No one has any doubt that the failure to construct Kalabagh dam was a grave error that contributed hugely to the power shortages that now cripple the entire economy. The resultant rapid depreciation of the Rupee in the last five years (almost 50%) has now escalated the cost of every development effort in Rupee terms and what compounds this tragedy is the fund waste that went on during the past four years. In the figures above, the zeros don’t imply absence of cost escalation; they indicate that no funds were released for those projects. The PC says that costs have been adjusted for inflation though in cases like Mirani Dam, no provision has been made for cost escalation. The figures tell a worrisome tale; a huge backlog (including Kalabagh dam) that has built up and progressively how difficult it is

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Federal MTDF Use target

185 197 199 207 237 1,025

175 207 171 127 143 823

MTDF target

Use

62 71 76 78 88 375

94 114 115 128 119 570

National MTDF Use target

247 268 275 285 325 1,400

269 321 286 255 262 1,393

use %

108 119 104 89 81 100

becoming to cover that back-log, given the resource deficit created by the continuing low tax-to-GDP ratio over the years, and waste of the scare resources that are generated.

The expanding gap in the infrastructure foretells miseries for the economy.

These figures indicate that the allocation for PSDP was never enough. Even if you overlook the fact that PSDP allocations were never enough for the real needs, the amount allocated too was, at times 20%, less than the project costs, as was the case in 2006-07.

In 2004, it was pointed out that, in its drive to cut the current account deficit, the government was prioritizing build up of its exchange reserves over investment in infrastructure which was a bad policy because it was not ‘balancing’ the two needs fairly. The federal allocation for PSDP that year was just Rs 60 billion. The reality is that the backlog created by wholly inadequate allocations for PSDP, will now require allocation of Rs 500 billion every year for the next five years.

The reason therefor is that, while not enough was done in the last two decades, the existing infrastructure (lot of it built during the era of the British Raj) has decayed beyond repair, and must be re-built. This scenario has been rendered worse by the damage caused by floods in the past, particularly by floods that we lived through in 2010 and 2011. It is equally important to note that snowfall this winter has been heavy, and we will to witness floods worse than the ones we lived through in the last two years. The incumbent regime has not had time to reflect on the preparatory work for this coming stress and, in all likelihood, the damage would be substantial adding to the existing huge backlog. The consequences could be bad for the whole economy, be it the agriculture, services, or the industrial sector. It is time players in these sectors took notice of this issue and highlighted it to the government.

The focus should be on measures to protect river embankments to ensure that the village-town road connections stay intact to permit access of both emergency services as well as movement of raw materials to industrial sectors so that economic growth is not cut to a dangerous level to necessitate further external borrowings which, in any case, would be difficult as the global economic recession worsens in the coming years – a prediction already being repeated by the IMF, WB, ADB and other IFIs which will limit lenders’ ability to lend.

The private sector must now make many vitally important decisions: it must decide what it can do on its own to bridge the gap in power-generation sector since the state clearly isn’t bothered about plugging this gap, nor has the resources for it; if this gap isn’t plugged to a point where March 2012

C over Story it allows the production plants to operate at least at break-even capacity, the industry can’t remain competitive.

In a global market environment, wherein many of the otherwise fast growing East Asian economies now confront drops in export demand and over-capacity in their industrial sector, the trick to be adopted by all (China in particular) would be cost cutting to reduce the price of their exports. Retaining a foothold in their traditional export markets would be possible for Pakistani manufacturers only if they follow suit, but won’t succeed in that effort without, somehow, making sure that power supply stays at a level that permits operating at break-even capacities.

Private sector Power load-shedding is must decide unavoidable until resources what it can do are built to revamp the generation sector–replacing the old to bridge the equipment with newer, more gap in the efficient technology. In the powerinterim period, the only option is to organize power loadgeneration shedding whereby, while the sector since nation shares it, the the state isn’t whole sacrifice doesn’t become bothered overly demanding of anyone about plugging –house-holds, factories, offices; it calls for a purposethis gap, nor oriented dialogue with power has the regeneration and distribution sources for companies to arrive at workdoing that able schedules.

The other imperative is that both power generators and users need introspection i.e. cutting power theft, and timely payment of electricity bills. It is pointless to go on blaming each other; it never served any purpose in the past, nor will it do so in the future. Players in the industrial sector must join hands with distribution companies to overcome this malaise that has virtually been killing power generation and distribution sectors.

It is also time for the industrial consumers to study in depth how they can cut power waste and economize on its use – an exercise that has often not been taken seriously. The state of affairs is much worse in factories that use natural gas as fuel for their own full-time or standby power-generation systems. In one case, owner of a factory recalls that, following the rise in gas prices, his factory’s gas bill rose to Rs 140,000 a month. He therefore began checking the gas supply line in his factory; only then did the employees disclose that they had noted gas leaks for a long while (but didn’t feel the need to point them out). After obtaining approval of the gas supply company the pipeline connecting the main supply line to his factory was dug out and replaced. Thereafter a miracle occurred; the gas bill fell to Rs 14,000 a month–one-tenth of the bill received until the pipeline overhaul was undertaken. It is highly likely that many factory owners are oblivious to the fact that steel pipelines have a limited useful life, and it goes down if they are buried in land where sub-soil water is unusually high. Such factory owners should replace the

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supply pipelines– this time with pipes with nylon or plastic lining that increases their life because any watercaused erosion is prevented by nylon/plastic lining. Such one-time expense is imperative for cutting energy waste, excessive cost of energy, and escalation of the cost of production. The same applies to power lines that should be checked and replaced to cut power waste.

For the long term, however, much more needs to be done in many other areas of which the most important is a shift to alternate energy sources–wind and solar. The key plus point is the fact that the shift would give the users control over supply and its costing–the key element in ensuring long-term comFor the long petitiveness, at least to the extent of energy cost. It is run, much imperative that this shift is more must prioritized and private sector is in the forefront of this shift. be done in, The PC too believes that, while currently, the largest al- the most imlocations are for con- strucportant of tion of roads and highways return on investment in this being a sector is not as high as that major shift in energy and water sectors. A bigger impact to alternate on GDP growth could sources of occur if some funds were diverted from roads to energy–wind energy and water. and solar.

In 2006, the state had initiated a Public Private Partnership program (PPP) that led to establishment of an Infrastructure Project Development Facility–a special facility to materialize PPP. According to the PC, its New Growth Framework aims to encourage PPP and highlights to the state the need for re-vitalizing its ministries to address a crippling issuedeclining state of governance.

Project analyses revealed (to the PC) a variety of weaknesses e.g. sponsors conducted limited examination of alternatives to the proposed projects that could deliver the same output. Projects were often too optimistic about displacement costs; they kept escalating through projects’ lives and caused delays in execution. Even if cost-benefit analysis was conducted its quality was questionable. Sounds promising but needs to be tested. It is undeniable that Pakistan badly needs PPP. There is no alternative to public-private partnership but it must be on very transparent basis–a check private sector can provide.

But there is little the PC can do to prevent slashing of PSDP as the “first choice” when fiscal pressures build up.

Regimes lack the ability to grasp the implications of this act. The short run effect of slashing PSDP is estimated to have elasticity of about 0.03; if PSDP is cut by 10%, economic growth falls by 0.3%. While public-private partnership needs encouragement for real transparency via private sector check on tendering, disbursement, monitoring, etc., the state can’t give up its role in financing PSDP; it must increase PSDP, not cut it at will.

March 2012

E conomy Realities that we refuse to see

S

ince early January, we have regularly been reading reports in newspapers and watching on our TV screens how severe and prolonged has been the snowfall this winter.

Access roads to towns at high altitudes in Pakhtunkhaw and Baluchistan are intermittently being rendered unusable because many feet of snow covers them for miles at a stretch. For days people live without water because supply lines are clogged with frozen water. What we do not know yet is how many humans Winter this have died because of these severely unfavourable conyear will be severe and last ditions.

Build-up of this scenario is until endworrisome because weather March; this warn that this cold foretells huge experts wave will last till March; it is water flow in flashing signals that haven’t the river been noticed by the governsystem this ment because it is fighting a long political battle What is summer and yet to be noticed is that the floods that high snowfall in could be worse unusually the North implies build-up than those of water reserves that would faced in 2010 flow into Pakistan’s rivers during July and August. Based and 2011. on the sad experiences of 2010 and 2011, it foretells another round of devastating floods unless, by early April, preparations are completed to commence repairs to the canal banks that have not been repaired since the last floods.

Repair work doesn’t start by putting on an electric switch; it requires: • assessment of the existing damage-types in various areas, • designing technical strategies to repair the various damage-types, • segregating the task into two major categories: - jobs that can be executed by irrigation department, and - those for which private sector participation is required.

The last step is floating tenders and selecting the lowest bids provided they are made by contractors with satisfactory track record of finishing work on a timely basis evidenced by their experience, expertise and resources (i.e. equipment).

So far, there are no indications that the government is aware of what the future holds in terms of increased water-flow in the country’s rivers, and how it would be regulated to fore-stall chances of overflow and flooding of towns on river banks. Planning repair work and implementing a remedial emergency strategy can spare millions what they had to live through during floods in 2010 and 2011–miseries that have not been addressed yet in some towns in interior Sindh despite claims about remedying them. UN estimates of the losses inflicted by the 2010 floods highlighted the fact that this disaster was much more devastating than the tsunami

23

that hit South Asia in 2004, the 2005 earthquake in Pakistan, and the earthquake that hit Haiti in 2010, all put together.

By the time losses were assessed, the number of the dead and the assets destroyed rose further and extent of damage was subsequently revised upwards to over $10bn but that was just the start; the massive crop loss caused led thereafter to food shortages and tougher days for all. Food grain and sugar import increased the already rising trade deficit.

Global weather pundits are of the view that a shift in climate patterns will cause much higher rainfall in the summers in Baluchistan-Sindh belt during the next 10 years.

In fact, the climate change that began in 2010, and will continue for years to come, is a phenomenon that warrants long-term planning–complete review of the state of the river banks, their strengthening on a lasting basis, and developing areas that can be used to store rain and flood water to assure its year-round availability to the agriculture sector to increase crop output as well as employment.

The tragedy, however, is that on the one hand we continue to have one of the lowest tax-to-GDP ratio and on the other a track record of wasting bulk of the tax revenue, and the habit of cutting the budgetary allocations (which, to begin with, are too little compared to the needs) for development spending –a tendency that resulted in building-up a huge backlog of inadequacies in the physical infrastructure which are being compounded by continued high population growth. The fact that this expanding gap is impacting economic growth is not a secret anymore; for the fourth consecutive year, Pakistan will have GDP growth rate below 7% – the least necessary to contain the escalating, in fact threatening, poverty level.

The government does not seem to realize the criticality of a basic reality i.e. if the industrial sector cannot be supplied the required quantum of electric power, growth from the vast agriculture sector be assured by all means to compensate for that loss. For a regime calling itself ‘peoples’ regime, this is politically important, if not for any other reason but there is very little that shows the regime’s real concern for the ‘people’.

BISP–a system that dolls out cash–cannot repair, upgrade, or expand the canal system, increase arable land and thus reduce poverty. Damage that may be caused by floods in 2012 could up poverty levels due food scarcity, while huge sums would March 2012

E conomy the SME sector. As a result thereof, liquidity of the banking sector is virtually reserved, for investment in short-term public sector debt and is causing GDP growth to slide.

While banks face likely delay in repayment of public debt (which matures virtually every month), they do not see lending debt turning into an NPL as could lend- ing to borrowers in the private sector. But it is likely that public debt repayment could be delayed and banks asked to do more.

This should concern not just banks but the overall financial services sector. Given the way things are– sidelining of PSDP and build up of what would eventually be the largest-ever fiscal deficit in the country’s history – there is scant likelihood that the country’s river system will be repaired in time to limit the flood losses below their last year level. That being the likeli- hood, institutions lending to the agriculture sector should be prepared for absorbing loan losses, at least at the FY-11 level, if not more. It may sound tough, but is likely. So, what banks need to focus on is expanding their resources bases, which is a tough proposition.

Tough though this proposition may be, but there is no other choice. Slide in economic growth is worsening the risk perception of Pakistan, which is diminishing the chances of getting external inflows that could be invested in the physical infrastructure. That the physical infrastructure must expand, is a reality that is manifested by inadequate domestic production of energy – oil and gas – and electricity that together drive the wheel of industry and create both wealth and employment. There is no other choice but to forego the comfort and convenience of today for a brighter tomorrow, impliedly save to invest in the future; that should become the banking sector’s slogan.

Unless things change radically, the reason for painting such a bleak picture of the second half of year is that the fiscal mess Pakistan confronts can’t be remedied; with economic growth on a slide, there are fewer chances of a hike in the low tax-to-GDP ratio and, impliedly, the resources to repair the wide variety of damages caused to the economy. The big tragedy is that Pakistan has several sectors–energy, metal coal mining, agriculture, fruit processing–that foreigners want to invest in bringing the resources we need, but won’t do so at present because of the risks that are clearly visible – low growth, high unemployment, weak security but, above all other negatives, uncertainties surrounding the political system, which are the out- come of sheer bad gov- ernance.

It is for the responsibility conscious to take up the challenges the regime is avoiding.

We must generate the needed resources domestically to put the economy back on track. Just by raising the output of the power generation sector we could push up growth, cut unemployment and, to a large extent, retard negative trends that are worsening Pakistan’s risk perception.

have to be spent on the rescue and rehabilitation work–a task not com- pleted after the 2010 floods and keeps millions unemployed. It must not be overlooked that this sector employs two-thirds of the workforce, which must remain gainfully employed if we are to eliminate the chances of mass unrest and a major social upheaval. To avoid such a scenario from developing (not done successfully as reflected in the protests following the floods) the regime must try to ensure minimal damage to river banks, water courses and the streets leading to the highways, and quickly repair the exiting damage thereto to revive hope among people to restart the crucially important farming activity.

The prospects of future damage pose big challenges because, besides widespread misery, crop losses could reduce exports of the agricultural produce – rice, cotton and wheat. Besides (as in 2010), meeting shortages of essential food items could worsen the mounting external deficit, with its consequences for the economy as a whole, and the worst of those could be depletion of exchange reserves and consequent weakening of the Rupee, and the logical fallout thereof being higher inflation. Put all of these possibilities together, and the picture that emerges is fairly depressing.

In early February, the government reportedly asked the State Bank of Pakistan to arrange for writing-off agro-loans worth Rs 4bn extended by the country’s banking sector; these loans need to be written-off since, reportedly, the borrowers–all of them flood-affected entities–can’t repay.

It is very likely that most of these borrowers suffered losses due to the flood last year and the year before. The point of concern though is that if the flood occurs again in 2012, will banks be required to write-off more loans, or is there a move underway to limit flood losses in 2012? This question has yet to be answered. That’s not all; banks may be asked to focus on rebuilding the damaged infrastructure in villages – houses, shops, silos, and could include repairing basic healthcare units besides provid-ing agro-gadgets, seeds, pesticides, fertilizer and other inputs via soft loans. But will banks have the liquidity therefor?

Economic slide is contracting savings, and risk-aversion too is limiting the desire of banks to offer fresh funding support to

24

March 2012

Voice of Industry EU Trade initiative for Pakistan: Pluses and minuses

by Majyd Aziz

P

AKISTAN, bestowed with many bounties of nature, frequently faces natural disasters that strain the nation’s unstable economy and ruthlessly disrupt the lives of its people. The earthquake in 2005 in the Northern Areas devastated a large population resulting in countless deaths and economic losses running into billions. In 2010, the country faced another monumental calamity caused by floods ensuing from heavy monsoon rains that violently affected one-fifth of the country. More than 20 million citizens were directly affected and there were more than 2000 casualties. The loss to property, infrastructure, and livelihood was incalculable. Some estimates put the total losses as high as $45 billion. Sympathy, relief goods, pledges, and expert human resources poured in from all over the country and from everywhere around the globe.

Although, during and after the disastrous floods the Pakistani government was frantically appealing for all kinds of aid, many donors preferred to contribute directly or through trusted NGOs and CBOs to the affected and displaced victims. The appeal also resonated in Brussels at the headquarters of the European Union where member countries agreed with the superb presentation made by Federal Commerce Secretary, Zafar Mahmood, who was accompanied by the then Foreign Minister Shah Mahmood Qureshi on this trip. The EU members, accepting Pakistan’s oft-used mantra of ‘Trade not Aid”, announced an economic package at a press conference on October 07, 2010 addressed by EU Trade Commissioner Karel De Gucht. This envisaged duty exemption on 75 designated products constituting 27% of Pakistan’s exports to EU countries, for a period of two years, subject to the approval of WTO. Humanitarian consideration was pragmatically enveloped in an economic facility.

Pakistan’s domestic industries, while deeming the package as restrictive and not all encompassing, nevertheless hailed the initiative as encouraging, and exporters were buoyant about their own expected financial inflows and projections, and began gearing up for new orders and new hirings.

The EU memThe prevailing slide in the bers on Oct dollar-rupee parity, the con7,2010 anfidence on their own prodnounced ecoucts, the favorable global nomic package demand for their goods, and the sympathy factor were all envisaging positive and favorable. The duty extemphigh hopes, that Pakistani tion on 75 des- exporters would further consolidate and substanignated prodincrease the market ucts constitut- tially share in EU countries, inculing 27% of cated in them urgency and Pak exports to optimism.

EU countries When the proposal was for two years. placed before the WTO for admitting it as a waiver

in January 2011, 150 of its 152 members supported the request under the Most Favored Nation stipulations. The waiver – lowering trade barriers for humanitarian reasons – was unprecedented in WTO since there was no precedent of similar action because preferential trade terms offered to one member must be offered to all, thus making such favoritism impossible. The EU desired that WTO members ignore the rules to help Pakistan in these extenuating circumstances. Alas, Pakistan faced an unexpected bombshell. While countries such as China, Saudi Arabia, United States, Kuwait, Oman, Qatar, UAE, Chile, Turkey, Uganda, Colombia, Norway, Mauritius, and Zambia, etc., provided full support to grant of the waiver, Bangladesh, Brazil, Chile etc., spearheaded by neighbor India, put a damaging spanner in the works leading into an undesirable and unjustified deadlock.

What was at that time commended as a heartening gesture

by EU, as well as by other WTO members, seemed headed for defeat courtesy the negative stance maintained by Pakistan’s traditional competitors because it was highlighted as providing Pakistan with undue advantages and unwarranted benefits. Pakistan was having her worst nightmare and this calamity, with losses in billions, was in addition to billions of dollars spent on the Global War on Terror since Pakistan was a front-line state in this operation too. To date, Pakistan has spent nearly $ 70 billion and has lost close to 40,000 civil and military casualties in this war.

The stalemate was ostensibly broken when, during the visit of the Commerce Minister accompanied by a 70-member trade delegation (the writer being a part of it), the Indian authorities agreed to withdraw objections to this initiative.

However, the bolt from the blue then came from Dhaka and suddenly it seemed that Pakistan was back to square one in Geneva. Fortunately, friends of Pakistan, primarily Saudi Arabia, did not let the issue to be further exacerbated, and Bangladesh and some other countries had to relent in favor of Pakistan, albeit with some changes that addressed their apprehensions and concerns.

The journey from Brussels to Geneva to Brussels took nearly sixteen precious months and it would be another couple of months before Islamabad gets the final nod. The

25

March 2012

Voice of Industry trade package would be presented before the General Conference of the WTO for approval where, apparently, no opposition is expected. After the General Conference clears the package, a bill would be tabled in EU Parliament for final approval.

What is the real benefit of this initiative? What difference would it make in enhancing Pakistan’s exports and its manufacturing capacities? How would this fare well with the new GSP Plus that would be applicable to qualifying countries from 2014? When the EU proposal for Pakistan was decided, there was a sense of excitement among exporters from Karachi to Peshawar. The 75 items translated into some $900 The main items of million worth of exports corresponding to 27% of the textile sector Pakistan’s total exports to bedwear, ready- EU countries. made garments These include 65 textile products, 9 from the leather and cotton fab rics, which com- sector, and also ethanol but the main items of the textile mand 38 percent, sector bedwear, readymade 20 percent and garments and cotton fabrics, 12 percent share which command 38 percent, 20 percent and 12 percent respectively in share respectively in exports exports to the to the EU, are not included in the concession package. The EU, are not sub-textile sectors of dishincluded in the cloth, duster, knitted trackconcession pack- suits, other fabrics, towels, age. gloves and socks would benefit. The total exports from Pakistan amount to $ 4.50 billion. There were various estimates hovering around that Pakistan’s exports to EU would increase by more than $250 million per year. This could have been possible if it was applicable from January 2011 when economic conditions in Europe were attractive for inflow of Pakistani exports.

Today, most of Europe is in a financial and economic turmoil. Things are not as conducive as they were last year.

Yes, Pakistani exporters would endeavor to extract maximum advantage from the initiative, but the possibility of enhanced exports of around $500 million until December 2012 seems far-fetched. The pragmatic advantage Pakistan would probably get is not more than $ 200 million during the two-year tenure of this package. This figure may not be accepted by all but, if the present shortages of infrastructure (that have played havoc with textile units, especially in Punjab) persist then the desired figure may not be achievable.

Moreover, EU has imposed ceilings on eight major items that are not at all acceptable to the industry as Pakistan has been exporting these products under different tariff codes, and the trade figures are actually understated drastically. It can be correctly said that the ceiling in these categories may be exhausted within a few months, thus narrowing the benefits from the described concessions if the exporters manage to operate their units even with all the negative factors impeding their progress.

The way out is an urgent brainstorming session between the stakeholders in the private sector and government’s policy

makers, to evolve a practicable action plan to maximize the benefits of the package. Textile processing mills would have to convert to coal based power generation since gas supply in the coming years would be substantially reduced. At the same time, the government has to improve the political environment, ensure better law and order, spruce up the bureaucratic structure, settle all outstanding duty refund claims pending with the Federal Board of Revenue, convince State Bank of Pakistan to reduce the discount rates, improve good governance, stop human rights violations and, more importantly, announce initiatives that would enable the private sector to reduce the cost of production.

Pakistan enjoyed GSP Plus The present from 2002 to 2005, but after expiry of that period, the package is just a short-term EU did not renew this package. It is worth mentioning booster, the real here that EU leaders are remedy is a mixsupportive of the proposal ture of various to accommodate Pakistan in factors such as the new GSP Plus initiative diversification of from 2014 onwards. At the products, tapping same time, the brainstorming session must also discuss new markets, the game plan to ensure that sense of urgency, Pakistan not only qualifies and government for the GSP Plus commencand stakeholders ing from 2014, but also being on the convinces SAARC countries to strive for a uniform and same page. common strategy applicable to all SAARC countries. This would naturally benefit Pakistan, and provide the Pakistani exporters the momentum to compete with other competitors on an equal footing. This is also the responsibility of the decision makers to lobby strenuously in SAARC as well as in EU. Moreover, the private sector, under the lead of FPCCI, must utilize services of top lobbyists for inclusion of Pakistan in GSP Plus.

It is hoped that this would be given top priority by the concerned Ministries as well as by the highest authorities in the government today. Pakistan must persuade EU to change the criteria for GSP Plus so that benefits of this scheme accrue to domestic exporters who are geared up to expand exports to EU. Currently, GSP Plus is given only to those countries whose exports to EU are less than one percent of their total exports. Efforts must be made to convince EU to increase this percentage as Pakistan's exports to EU are presently surpassing the threshold.

Under GSP Plus import duties on products there would also be no limitation on exports.

It is important that Pakistani exporters and the government maintain optimism and ensure that the EU GSP Plus boat does not leave the shores without them being on board.

The cautionary signal is that the present package is just a short-term booster, and not a complete panacea for Pakistan’s alarming economic situation. The real remedy is a mixture of various factors such as diversification of products, tapping new markets, sense of urgency, and government and stakeholders being on the same page.

26

March 2012

Voice of Industry News Briefs

M

ian Abrar Ahmad, President, Karachi Chamber of Commerce & Industry urged the governments of Pakistan and India to delink the economic and commercial cooperation from politics. In his address of welcome to Mr. Anand Sharma, Indian Minister for Commerce, Industry and Textile, he underlined the need to building trading blocks with SAARC countries and Central Asian Republics, particularly with India and China. He called upon the governments of the two countries to take measures to strengthen bilateral trade relations in the changed global economic scenario. He said that as members of WTO, both India and Pakistan have to accord MFN status to each other. Granting MFN status to India need to be realized as economic obligation instead of political framework, he said adding that India should also come forward with an open mind to promote bilateral investment to further deepen the economic relations.

be undone in the event of disruption of the ongoing dialogues.

In his address, Mr. Muhammad Zubair Motiwala, Chairman, Sindh Board of Investment, proposed five points which, in his opinion, if implemented would act as cornerstone for development of bilateral trade between India and Pakistan. The proposal included, besides others, facilitating travel between India and Pakistan, issuance of multiple visas to business communities for multiple cities, removal of non-tariff barriers and introduction of mediation committees in Bombay and Karachi Chambers to address the grievances of importers and exporters of the two countries.

Reciprocating the sentiments expressed by Pakistani businessmen Mr. Anand Sharma underlined the need for starting a new chapter of relations between India and Pakistan based on mutual trust and friendship. He said that trade is imperative for bilateral relations and a way to address all matters of economic engagements.

He said that today economic and political shifts were taking place around the globe. Mr. Sharma said, if India and China could become trading partners despite differences, there was no reason why India and Pakistan could not become the largest regional trading partners.

Mr. Tariq Sayeed, Chairman, Pak-Iran Business Council and Vice President, Confederation of Asia Pacific Chambers of Commerce & Industry appreciated the bold statement of President Asif Ali Zardari that ties with Iran won’t be undermined by pressure of any kind.

He said that projects like Pak-Iran Gas Pipeline are crucial for forging deep alliances between the two countries. He also appreciated the leaderships of both the countries for setting the target of bilateral trade to the tune of $ 5 billion and termed it as an important step forward to further improve bilateral relations with neighboring countries. He proposed to the government of Pakistan to give full representation to the private sector of Pakistan on policy-making level and regarded it as instrumental to achieve envisaged trade targets set

by Pakistan with various countries including Iran.

Mr. Irfan Qaiser Sheikh, President, Lahore Chamber

Speaking on the occasion, Mr. Siraj Kassam Teli, Chairman, Businessmen Group, called for improving economic ties between Pakistan and India as this would help resolve the political issues that obstruct friendly and cordial relations. He welcomed the vision of the Indian Prime Minister Dr. Manmohan Singh for transforming South Asia with the cooperation of all the neighbouring countries including Pakistan in order to alleviate poverty and bring prosperity in the region. He urged upon the governments of the two countries to make a commitment to their business and industrial communities that whatever has been achieved will not

27

March 2012

Voice of Industry of Commerce and Industry, and other leaders of LCCI urged the government of Pakistan to focus on promotion of regional trade.They underlined the need for Pakistan to develop a strategy of engagement with regional countries with a view to maximize mutual economic and commercial benefits.They said that the growth in SAARC region has been projected to surpass 50 percent of the world’s gross domestic product by 2030. This calls for urgent steps by the government to boost intra-regional trade, they added.

Mr. Ehteshamuddin, Chairman, Korangi Association of Trade and Industry (KATI), emphasized the need for presenting soft image of Pakistan among foreign investors to clear off negative propaganda by the foreign media. Talking to Dr. Tilo Klinner, Consul General of Germany, he said that Afghan war has given a big blow to Pakistan’s economy and EU and USA should help Pakistan by providing greater market access in order to rebuild its economy. Reciprocating, Dr. Klinner said that Germany is ready to provide every possible assistance to Pakistan in energy sector in order to overcome its ongoing energy crisis. He said that there are several options of alternative energy resources including windpower, solar and thermal power and Germany is already providing some solutions to Pakistan’s energy sector. He called for image building of Pakistan especially Karachi in order to make it attractive for foreign investors.

Mian Abrar Ahmad, President, Karachi Chamber of Commerce and Industry has strongly rejected the move made by Federal Board of Revenue to unilaterally impose condition of obtaining buyer’s CNIC and demanded immediate withdrawal of this mandatory condition for all purchases made by an unregistered person. He said it was unfortunate that this major decision has been made without consultation with the business and industrial community of Karachi.

Pakistan Hardware Merchants Association (PHMA) has also opposed the FBR move and called it as unjustified and illogical. The Central Chairman of PHMA said

28

that SRO 821(I) 2011 would not do any service to the Federal Board of Revenue. Rather it would further tighten the noose around the registered tax payers who are already facing a number of challenges and have devastating effect on the businesses in Pakistan.

Mr. S. M. Muneer, President, IndiaPakistan Chamber of Commerce and Industry demanded implementation of the agreement between the Reserve Bank of India and State Bank of Pakistan for opening each other’s bank branches. Speaking at the reception hosted by FPCCI in honor of Indian Commerce Minister Mr. Anand Sharma and his delegation, Mr. S. M. Muneer said that without the provision of banking services, opening of letters of credit, and cross border transactions of funds , trade between the two counties could not be undertaken. He also demanded liberalizing visa regime by both the countries . He strongly recommended that rail service via Khokhrapar Munabao, bus services between Srinagar and Muzaffarabad, religious visits, shipping protocol, deregulation of air services and joint registration of basmati rice should be revisited.

Trade and industry representatives have strongly protested against the increase in prices of POL and imposition of new taxes on CNG. They demanded of the government to immediately reverse the decision and find out avenues of revenue generation.

Mian Anis A. Shaikh, President, Multan Chamber of Commerce & Industry expressed concern over the monetary policy announced by the Governor, State Bank of Pakistan maintaining the 12 percent bank rate without justification. He said it was the need of the hour to reduce and gradually bring the interest rate down to single digit.

He termed the SBP’s decision as anti-industry and anti-economy.

KCCI President Mian Abrar Ahmad has expressed deep concern over undue victimization of pharmaceutical industries of Karachi in particular and Pakistan in general in the backdrop of tragic incidence of deaths at Punjab Institute of Cardiology. He urged that vicitimization and harassment of the pharmaceutical industry be stopped and they be given fair opportunity to clarify their position.

In an emergent meeting held in the office of Korangi Association of Trade and Industry (KATI), industrial associations of Karachi have strongly condemned the highhandedness of Employees Old Age Benefits Institution (EOBI) and unabated harassment and extortion.

They demanded of the government to take immediate action to stop EOIB from harassing the industries.

March 2012

R egulator y Compliance SECP Framework for AML and CFT Regime

ary actions may be taken for violating trading guidelines.

The market-makers will be allowed to get a margin of 5 to 10 percent only and not allowed to fleece buyers or sellers by exploiting the situation. Unlike the traditional commodity markets, the buyer or seller can always lodge complaints against the concerned broker or the market-maker either to PMEX or the SECP.

The Securities and Exchange Commission of Pakistan (SECP) has introduced a regulatory framework for implementation of anti-money laundering (AML) and counter –financing terrorism (CFT) regime in the capital market of the country. The framework is intended not only to assist in improving Pakistan’s outlook through increased compliance with the AML and CFT standards set internationally but will also complement the objective of creating a general culture of documentation in our economy operations to promote transparency and disclosure.

Over the years, there has been increasing focus by the international community towards formulation of a financial system that efficiently counters risks of money laundering and terrorist financing. The 40+9 recommendations of the Financial Action Task Force (FATF)-an inter-governmental body entrusted with the responsibility of developing and promoting policies to combat money laundering and terrorist financing-form the basis for effective AML/CFT framework across jurisdictions and are used as a yardstick to evaluate compliance of countries with the AML regime.

The SECP framework places ample focus on effective customer due diligence/know your customer policies and seeks to remove deficiencies in the current system for ensuring adherence to the best international practices in the brokerage business.

The SECP has already introduced similar legal framework for the mutual fund industry and insurance sector.

The recent amendments approved by SECP to the General Regulations of the Karachi Stock Exchange make it mandatory for brokers to comply with the AML/CFT guidelines issued by the regulator. The guidelines are based on FATF recommendations and require brokers to ensure identification of actual beneficial owner of an account, conduct risk assessment, monitor transactions executed and detect any unusual activity that does not correspond to the profile and expected trading pattern of the customer.

Murabaha Transactions SBP Amendment

SECP Rules for PMEX to Improve Trading Practices

The Securities and Exchange Commission of Pakistan (SECP) has approved regulations governing market to improve trading activities at the Pakistan Mercantile Exchange Limited (PMEX) through promotion of liquidity and efficiency.

The concept is in line with best international practices as market–makers play an important role at the trading platform by providing two-way quotes – a regime that supports trading at the exchange as both buying and selling options for the commodity future contracts would be available with the presence of market makers in the PMEX. Under the SECP regulations the market-making agreement would be well documented as per prescribed definition, powers, functions and obligations of PMEX and disciplin

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The State Bank of Pakistan has amended its earlier instructions with regard to obtaining invoices in the name of bank in Murabaha transactions.

SBP IBD Circular 2 of 2008, Appendix-A- Essentials of Islamic Modes-Murabaha , Sub Clause VI requires Islamic banking institutions (IBIs) to obtain invoices in the name of bank in murabaha transactions. However, considering the practical difficulties in obtaining invoices, particularly in transactions like purchase of phutti, raw hides, milk, sugarcane, etc, the instructions on obtaining invoices have been reviewed and amended by SBP as under: i) The invoice issued by the supplier shall be in the name of bank-account client like ‘1st Islamic Bank-ABC Company’. Where obtaining invoice in the name of IBI is not possible, the invoice in the name of client may also be acceptable, subject to specific approval of the Shariah adviser, for all such transactions. ii) In a transaction where obtaining formal invoice either in the name of bank or the client is not possible, then the document or combination of documents like truck receipts, delivery note, goods received notes, physical inspection report, kachi parchi, inward gate pass etc having particulars ( names of buyer and seller, date of purchase or delivery, description of goods, quantity and purchase amount etc) may be accepted in lieu of invoice with the approval of Shariah adviser. iii) The Shariah adviser, while approving any transactions as mentioned in Paras (i) and (ii) above, shall document the reasons and industry norms etc due to which obtaining invoice and making payment directly to the supplier is not possible. He shall also review and approve the process flows etc to be adopted by the client or IBI to execute such transactions. The Shariah advisers shall also, either themselves or through suitably trained staff of the IBIs, make onsite verifications of such transactions on sample basis. iv) The payment for Murabaha transactions shall either be made directly to supplier or credited in an escrow account by the IBIs. However, in cases where direct payment to supplier is not possible due to genuine reasons, the payment to the supplier may be made through the agent subject to explicitly recording the reasons and approval of process flow etc of all such transactions by the Shariah adviser.

With the issuance of the above amendments, the SBP IBD Circular No 04 dated November 15, 2008 stands repealed.

March 2012

B anking & Finance Trade finance vs. sanction compliance – banks between two fires

by Ahmir Mansoor

W

ith globalization of trade, the world has become more inter-connected, and the application of one country’s laws to an apparently unrelated transaction has increased. This requires the parties to a trade transaction to be familiar with the sanctions and regulations that are directly or indirectly applied to them.

Sanctions are restrictive measures to ensure peace and security, prevent conflicts, fighting against terrorism and non- proliferation of nuclear weapons programmes. Trade sanctions could take many forms: for example embargo /control on arms, on certain goods and technologies. There are trade and economic sanctions that are imposed by the America’s Office of Foreign Assets Control (OFAC), United Nations (UN) and the European Union (EU). OFAC compliance regime carries extraterritorial effect as well. The issue of sanctions is “political” and is used to boycott/prohibit dealings (i.e. import/export) with specific countries, persons, entities, ships, aircraft or goods.

The severity of sanctions has become so intense that even trans-shipment check is now performed by banks. For example, a Letter of Credit (LC) allowed trans-shipment, port of loading was ‘any Chinese port’ and port of discharge was Keamari Karachi port. Nominated bank, although satisfied with the Know Your Customer (KYC) checks on the Issuing bank, refused to get involved in this transaction due to a ‘sea search hit’ report findings that ‘trans-shipment took place on an Iranian vessel at port Bandar Abbas.

Bank dealing in trade finance is sliding into a difficult environment/dilemma of regulatory requirements (i.e. compliance with sanctions) or contractual obligations under various trade finance instruments – documentary credits, guarantees and collections. Sanctions are a practical reality rather than something that can be avoided. Participants in international trade have no excuse for being unaware of sanctions and their effect. Sanctions are now a fact of life. Enforceability of sanctions lies with courts, or national regulators or administrative agencies, which is generally unobjectionable, but there are bigger issues that banks must address.

Letters of credit and cross-border transactions: Extraterritorial sanctions are bringing into question the independent nature of the LC and its irrevocability. The implications of sanctions for the nominated or confirming bank’s obligations under trade related transactions is creating an uncertainty for them in terms of reimbursement against complying presentation of documents if the issuer finds that there is a sanctioned person or entity named in the LC documents.

The irrevocable payment undertaking nature of documentary credit against complying presentation can be deferred temporarily due to sanctions, but as soon as they are lifted payment obligation is enforced on the issuing bank. This contradicts the mandated time lines for banks to complete an activity and thus weakens the character of the LC as the surest route to enter into trade transactions.

Banks are compelled to comply with the applicable national laws or regulations in the jurisdictions in which they operate.

International rules of practice (UCP600, URC 522 and URDG 758) don’t address and guide on how sanctions should be treated or their consequences under the rules. Sanctions, applied as international law and local implementing laws, or government regulations covering Anti-Money Laundering (AML), Counter Terrorist Financing measures, or the None Proliferation of Weapons of Mass Destruction requirements are laws that override international rules. There is no internationally accepted standardized text of sanctions and it varies according to the advice of the legal counsel of different banks who, at times, suggest troublesome sanction clauses in the letters of credit.

Nowadays, the sanctions issue is being faced by all banks and they are unable to resolve it. Many queries relating to sanction clauses were raised with the ICC Banking Commission. To deal with this subject, ICC established an ‘Anti-Money Laundering Task Force’ to investigate the issue. The results of its work come in March 2010 with the issuance of the document “Guidance Paper on the Use of Sanction Clauses for Trade-Related Products subject to ICC Rules”. The paper applies to products including the Letters of Credit, Documentary Collection and Guarantees. But this document should not be taken as a solution to the issue; it does provide guidance, for example, on the following sections: 2.2 There is no standard for these clauses and they vary considerably in their scope. Where they simply inform the parties that the bank is subject to sanctions, they are generally unobjectionable. Where they address the obligations of a bank that has been affected by a governmental sanction, they may usefully supplement the applicable rules of practice.

2.4 In Letter of Credit transactions, where sanction clauses give the issuer discretion whether or not to honour, they bring into question the independent nature of the Letter of Credit and its irrevocability. Of particular concern are clauses that alter reimbursement provisions of UCP 600 with respect to nominated banks that have acted pursuant to their nominations or that seek to shift the risk of compliance with sanctions to nominated banks.

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March 2012

B anking & Finance 2.6 The issue relating to the implementation of sanctions-related policy by banks causes a specific problem when considering the role of a confirming bank or a nominated transferring bank.

It is noted that the wording of some sanction clauses goes beyond informing the parties that an issuing or confirming bank is subject to sanctions. Some clauses may also include the bank’s special provisions/internal policies and link the UCP to the sanctions and regulations: Examples of troublesome sanction clauses: Bank X complies with international sanction laws and regulations issued by the United States of America, the European Union and the United Nations (as well as local laws and regulations applicable to the issuing branch) and in furtherance of those law and regulations, while Bank X has adopted policies which, in some cases go beyond the requirements of applicable laws and regulations.

•“Under UCP 600 concerned bank (i.e. nominated, presenting, confirming and issuing banks) shall examine the presentation taking into consideration the sanctions and regulations enforced by the US, EU and UN against certain national shipping lines and/or vessels and/or ports, therefore, we (as issuing bank) shall consider any presentation that shows a breach of such sanctions and regulations as discrepant, and reserve our right to stop payment/reimbursement or claim refund or any already paid payment/reimbursement. The bank assumes no liability for rejecting a presentation that may violate the aforesaid conditions and any loss, damages or delay arising directly or indirectly in connection with the aforesaid matters.”

• All parties to this transaction are advised that the US and other government and/or regulatory authorities impose specific sanctions against certain countries, entities and individuals.

Banks may be unable to process a transaction that involves a breach of sanctions, and authorities may require disclosure of information. Bank X is not liable if it, or any other person (involved in the transaction), fails or delays performance of the transaction, or discloses information as a result of actual or apparent breach of such sanctions. Trans-shipment is prohibited through Iran, Cuba, North Korea, Sudan and Myanmar.

Examples of sanction clauses stated above challenge the irrevocable nature of LC transactions. There it is advised that UCP and sanction clauses should be treated separately. Sanctions may be for a certain period which once lifted, allows handling transaction in the normal course as per ICC regulations.

Examples of a simple informative sanction clause: •“Presentation of document(s) that are not in compliance with the applicable anti-boycott, anti-money laundering, anti-terrorism, anti-drug trafficking and economic sanctions and regulations is not acceptable. Applicable laws vary depending on the transaction and may include United Nations, United States and/or local laws.”

• “Bank’s performance under the credit will be subject to no document contravening any sanctions order that is in place and for which the bank must abide” Sanction applied to Iran: Nuclear proliferation by Iran has brought the issue of sanctions more to the fore. The trade

and economic sanctions on Iran by the OFAC, EU and UN have made it very difficult for the financial institutions in the Islamic Republic to enter into LC transactions. Iran and Pakistan are keen on developing bilateral trade to the extent of US$ 4 billion by 2014 in the areas of energy, financial services and technical cooperation. One wonders how this would materialize with the sanctions that are likely to remain applicable to Iran and its banking system. The only alternative for L/C payments in this bilateral trade could be barter deals against commodity exports.

Conclusion: It is true that sanction clauses cause uncertainty about the irrevocable nature of a trade transaction leading to its restricted confirmation, reduced appetite to lend against such instruments, increased cost of transactions, and cause legal conflicts between jurisdictions of the counter-parties. Thus they reduce their practicability for bankers to provide finance, payment certainty, and risk mitigation. This sets a trade unfriendly environment.

This area has not yet been addressed in a mature manner. What banks and customers are experiencing today is just the beginning of a difficult period. Most customers think about sanctions to be an evil created by banks in order to shift their responsibility by taking letter of indemnity/or handling such transactions under the guise of customer risk. Sanctions clauses have become a competitive issue for some banks since by not including sanctions clauses in their LCs, confirmations and guarantees they are getting more business, often by levying high service charges.

This attitude is not fair to customers who are at risk for any sanction breach.

Banks are now required to have an effective filtering system that can pick up EU, OFAC, UN as well as their regulators’ sanctions listings. Compliance department in banks must ensure that the compliance software is capable of obtaining real and reliable information “hits”. Banks are now between two fires: one of regulatory requirements and the other of contractual obligations and therefore must have a “’Prudence Balance System”.

Auction of 3- Year Government of Pakistan Ijara Sukuk

The State Bank of Pakistan has accepted offers of Rs. 38.124 billion (face value) for 3-year government Ijara Sukuk. The cut off margin over benchmark was +0.0. The offered amount (face value) was Rs. 55.724 billion with margins ranging from -25 to +45 over the benchmark.

The SBP had invited tender for sale of the 3-year Government of Pakistan Ijara Sukuk through designated Primary Dealers from February 22 to 23, 2012 while the bids were opened on February 23, 2012.

Rs. In Millions Offered Amount (FACE VALUE) 03-Year Ijara Sukuk

55,723.900

Total

55,723.900

RANGE OF MARGIN over Benchmark (bps) 25.00 to 45.00

Out of the above bids, the accepted bids are as under: Maturity Period 03 -Yr Ijara Sukuk Total

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Cut-Off Margin Over benchmark (bps)* +0.00

Accepted Amount (Face Value) 38,123.900 38,123.900

March 2012

B anking & Finance Capital Markets and Corporate Growth

by Shakil Faruqi textiles, cement and autos are important sectors and indeed they are but not for stock market operations, investor exposure and equity financing.

Depth and diversification depends upon the evolution of corporate sector and its participation in capital markets, driven mostly by the needs of equity finance or long term borrowed finance. Corporate access to stock market is captured by the number of companies listed on the stock exchange, number of shares outstanding and the proportion held by outside investors. Among these, listing of companies at KSE over the past decade declined from 762 to 651 and further to 638 in recent times partly owing to liquidation and mergers. Over the same period, there has been sustained increase in their listed capital from Rs 229 billion to Rs 910 billion. The issue is how far stock market in Pakistan has been a source of sustained rise in net inflows of equity finance to corporate sector to support its expansion and growth? To figure this out one has to isolate growth in capitalization owing to stock price increase, versus new issues of stocks to investors by old and newly listed corporations alike.

O

ver the past decade, growth of capital markets in Pakistan has been dominated by stock market. Bond market is fairly small and is dominated by government bonds. Corporate bond market has been no more than a footnote and has not been much of source for long term financing to corporate sector. A review of how far capital markets have succeeded in their primary function of providing equity or bond financing to corporate sector to foster long term investment is rather revealing. The issue is whether capital markets in Pakistan have played the role as they did in front line countries to promote corporate sector growth.

Over the past decade, growth of stock market capitalization at KSE has been substantial, rising from Rs 392 billion in June 2000 to Rs 2732 billion by June 2010 at an annual rate of growth of 21 percent, periods of boom and bust combined. This is fairly respectable growth inded. At the height of stock market boom in mid-April 2008, KSE-100 index had briefly touched 15,600 level and capitalization was about Rs 4800 billion, the highest it ever has been.

After the crash and removal of market flooring by midJanuary 2009, KSE-100 index was down to about 4930, and market capitalization had plummeted to about Rs 1630 billion. Whatever the market had gained over the previous five years was wiped out within a few months. From thereon, stock market did recover to current levels of KSE-100 of about 11,300 and market capitalization of about Rs 9238 billion (January 18).

This boom and bust cycle followed by revival does not provide much insight into how it has supported long term growth of corporate sector, because such gyrations of capitalization levels are not conducive to fostering long term growth. Therefore, we need to look deeper into structure and mechanisms of stock market operations in Pakistan in its outline as below.

As for the structure, nearly 35 percent of stock market capitalization is in energy, followed by banking at about 20 percent; another 10 percent each in chemicals, food industries and transport sector. More than half of market capitalization is in two sectors alone, namely energy and banking which constitute about 55 percent of capitalization, while another thirty percent is in other three sectors.

Thus, almost 85 percent of market capitalization is concentrated in only five sectors which speaks volumes for diversification and depth of stock market of Pakistan. Sectors like energy and chemicals are relatively more open and are susceptible to world prices of hydrocarbons and exchange rate movements, their financial performance is almost indexed to these elements; hence a good part of volatility in their stock prices is a built-in factor. In contrast, shares of cotton textiles, autos, pharmaceuticals and cement sectors range no more than 2.5 to 3 percent each of total capitalization of stock market. This sounds rather odd, but these observations are based on a review of long term trends in sectoral capitalization. The common perception is that

One could argue that since there was a stupendous growth in market capitalization during boom years of 2005 through early 2008, this growth of capitalization must have enabled listed corporations to expand the size of their business operations. Rising capitalization levels certainly did provide the base, but growth of corporate sector during boom years was nowhere as spectacular as was increase in capitalization.

Equally spectacular was market crash that followed; but that did not lead to a widespread financial failure or demise of corporations either. How far these market booms and bust contributed to trends of corporate growth in Pakistan, remains to be ascertained. This growth remained fairly steady at historical levels.

Corporate growth has dynamics of its own, though it is affected by how pervasive and efficient the markets are in

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March 2012

B anking & Finance their operations with regard to mobilization of equity financing from investors at large. Whatever growth in equity financing has occurred, it is largely confined to about 50 companies amidst a dwindling group of corporations in Pakistan listed at stock exchanges. Short of playing the market for capital gains, not much increase has occurred in new net inflows in equity funds, and a good part of it has been undocumented, hence these levels are not known.

Another way to gauge corporate participation is to look at new IPOs floated. This activity has been fairly limited.

During the past three years, about 30 IPOs in all were floated in the market with limited amounts of capitalization. Corporations have not joined in droves to participate in stock market. There was a significant growth in the number of new companies registered during the past decade, but new companies have not joined ranks of publicly listed companies; liberalization, reforms, investment promotion and privatization drives aside.

part of the rise of index is being ascribed in anecdotal fashion to undocumented inflows of investable funds into stock market. The reverse happened at the time of crash during second half of 2008 and 2009. There were mas- Pakistani corporations did sive undocumented outflows; some were caught in engage in nothe net, but most escaped. table number of In the future, a sustainable bond issues in growth of stock market early years of cannot be hinged upon the past decade, what these undocumented but with the flows are, and how they onset of stock react to changes in taxation or regulatory environment. market boom followed by a Corporate bond market has bust, corporate not been much of a factor in corporate sector growth. sector at large Indigenous companies or seems to have businesses do not engage in stayed on the long term borrowings via side lines. bonds to finance their investment in their business expansion. It is a tiny market, coming out of shadows of long drawn nationalized era as it did in the late 1990s. Pakistani corporations did engage in notable number of bond issues in early years of the past decade, but with the onset of stock market boom followed by a bust, corporate sector at large seems to have stayed on the side lines. The total number of bond issues during the first half of the decade was much larger than during the second half of the decade, though the amount mobilized was fairly high during the second half of the decade mainly because of mega issues by a few large financial institutions.

Likewise, the investor base in corporate bonds is confined to leading financial institutions, not the investor public at large. Corporate bond market remains fairly shallow and it has long ways to go to play any meaningful role in providing term financing. The advent of sukuk is being heralded as a new launching pad for bond like financing, but it has not permeated the corporate sector. Sukuk based financing is beset by its own stipulations, the main stipulation being that real assets have to be identified, evaluated, pledged and held until maturity by corporate borrowers, more like a trust, before envisaged issue of sukuk can be floated. If corporate borrowers could muster such an asset base to begin with, why would they engage in borrowing against such assets. This needs to be looked into further.

Finally, investor attitudes in Pakistan are not driven by concerns like long term investment in capital market instrument in anticipation of decent income flows over time.

Instead, investing is driven by expectations of unrealistic levels of quick capital gains over the shortest period of time, and if tax free, even better. It is more a game of chance than serious investing. In all this, corporate growth implications are farthest from thoughts of typical noninstitutional investors.

For new corporations, equity financing via participation in stock market is not the preferred mode of financing their inception, expansion and growth. This experience of Pakistan is in stark contrast with the growth of stock market among comparator countries over the past decade no matter how such comparisons are done. Their corporate sector growth was spectacular, as was growth of their capital markets.

The reasons for low participation are partly historical, but in a large measure it is an outcome of economic and financial milieu that governs new corporate investment climate that has prevailed in recent years. A good number of new private companies, even fairly large ones, both old and new, have not gone public owing to requirements of financial disclosure, documentation and taxation. They have preferred to stay out of the public arena. The same reasons are now being credited, though in reverse, for the current market boom-let that has followed on the heels of postponement of a meaningful slab of CGT and suspension of inquiries about sources of financing stock purchases and affirmations of capital gains on stock trading by tax authorities. Reliance on own capital or undocumented financing has been endemic among old and new companies alike established over the past decade.

Recently, the KSE index has gained significantly and a new threshold of around 14000 is being anticipated. A good

(Excerpted from: Financial System and Economic Development- Pakistan, Volume II, Financial Markets.)

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March 2012

S ocial Issues Corruption, an immortal insect: How to soften up its stings?

C

orruption is the only creature that is immortal amidst everything mortal around it, probably because it is the illicit creation of mankind by trampling upon the domain of the Almighty, Who alone merits the prerogative to create. Researchers and social reformers have baptized it as in insect that never dies. Nevertheless, efforts need to be made, if not to eradicate, at least to curtail it, if not to extract its strings, at least to blunt them.

Once corruption comes about, it spreads in geometrical progression and soon becomes the way of life. Pakistan, like any other country, fell prey to this menace but, unlike elsewhere, its intensity here multiplied by leaps and bounds, and is constantly on an increase. Like malignant cells, it has penetrated deep through the fibers of our society. It has grown massive in size and multidirectional in nature. Its manifestations are widespread. Hence, any attempt to illustrate them would be a futile exercise.

There may be more than one reason of our financial ruin but the basic derangement that is the root cause of all our failings, which underlines all our short comings, and which counters all the corrective measures is CORRUPTION. Moreover, the gene of corruption is financial corruption. It is the mother figure that nurtures all other species of corruption. Obviously, therefore, if financial swindling alone is contained, all other channels of misdoings and misgivings are likely to, if not fully dry up, at least flow at acceptance level.

It is high time that anybody who may have anything of substance in his quiver to hit right at the root of this deeprooted menace should come forward with his prescription.

Hence, these submissions.

Once the conclusion that corruption is the basis of all other evils has been arrived at, the question that arises next is how to control and contain it? It is a million-dollar question that remains unanswered despite superabundant rhetoric. What is more alarming is the common belief that the situation is, or at least seems to be, The gene of incorrigible. The disease has since been diagnosed. corruption is many amulets have financial cor- Great been proposed. Several “conruption. sultant physicians”, both indigenous and hired from Therefore, if IMF museum, assumed in financial swin- rotation charge of the dling alone is ‘patient’, each claiming his to be the panacontained, all prescription cea, devolving on himself other channels Kar-e Maseehai (assignment to cure the incurof misdoings ables), and claiming to bring are likely to the dead to life. Yet the relief flow at accep- is not forthcoming. On the contrary, we are headtance level. ing fast toward a total

by Syed Sabir Ali Jaffery

collapse. Why is it so? What is that which is instrumental to such an undying devastation? The sooner an answer to this question is found, the better it would be for our financial health.

The most widely proclaimed line of action to eradicate corruption is to strengthen the accountability process. The proposition, although sounds expedient, is not an unmixed blessing. Punitive actions, no doubt, have their own impact.

However, they cannot be substitute of preventive measures.

Corruption is an attitude of life. It is a behaviour of human beings. It has, therefore, to be dealt with in consonance with the human nature that prefers material possessions and physical comfort to moral values. In order to smoothly overcome this nature of mankind, it is immensely desirable that emphasis should be shifted from punishing the corrupt to preventing the corruption. This does not, however, mean that corrupts should be allowed to go scot-free. It rather suggests that priority should be given to creating the conditions in which resorting to corruption becomes, if not impossible, at least difficult. Simultaneously, systematic and consistent efforts should be made to strengthen the moral fiber of the society to operate as a deterrent against all sorts of misdoings. Impartial, judicious, transparent, and brazen-handed accountability culture should also coexist, although to be looked upon as a last resort. This, of-course, refers to future. Accountability for crimes already committed should be fast and meaningful.

It may be argued here that severe punishment operates as deterrent against crime. This is not an unmixed truth. The ‘Consent’ or ‘Acceptance’ Theory of Managerial Authority presents limitations to this phenomenon. One may possess formal authority, which is meaningless unless it can be effectively exercised. And, an authority can only be exercised effectively, if those on whom it is ex- ercised accept it. Formal authority, in fact, is merely nominal; it becomes real only when accepted.

It is also the attitude of the individual convict that determines the impact of punishment. Habitual criminals don’t

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March 2012

S ocial Issues debts beyond the specified amount.

2. Currency notes of the denomination of Rs.5,000 and Rs.1,000 should be withdrawn immediately, that is, these shall continue to be acceptable by banks alone but shall stand ‘demonetized’ for all other transactions. The source of acquiring of this money may not be required to be divulged while depositing it with banks.The cash-free culture that would emerge as a result of these steps will be self-maintainable. No person on earth will be willing to acquire or possess the money which he will not be able to use at his discretion. Money is a means, not an end. When it ceases to serve the end, it becomes non-grata. Thus, there will be no violation of this law, and, therefore, no monitoring or supervision by any government agency or functionary will be needed to ensure its unhampered implementation.

These steps tend to attract resistance from certain quarters.

Obviously, those toiling under their own weaknesses could not withstand the resultant pressures. What is, therefore, desirable is a full-blown action in one go, leaving no room for its sabotage by vested interests.

To achieve this objective, developing of banking habits and popularizing of cheque currency are prerequisites. To start with, charges on the issuance of cheque books and government duties charged on various modes of bank remittances should be instantaneously withdrawn.

Yet another excuse usually put forth against augmenting the use of cheques is the low literacy rate in Pakistan. Instead of making any serious attempt to raise the literacy level, we curb enlightened activities in the name of illiteracy. Moreover, we don’t mind switching over to credit cards and ATMs, which indeed are a function one step ahead of cheque culture. The excuse is nothing but a hoax. Illiterate villagers taking agriculture loans or making Hajj deposits utilize banking services freely.

Moreover, our banks have never been deficient in handling the accounts of illiterate persons, purdah nasheen ladies, or disabled accountholders. Training material of our banks and code of banking practices are quite self-sufficient to manage these categories of accounts, and our bankers are well versed with the practical snags and legal requirements of maintaining such accounts.

care even for life terms. Capital punishment also fails to tame the hardened outlaws. There are also the ethnic and emotional repercussions, instantaneous reactions, and ancestral traditions that at times stimulate crimes. Suicidal bombing, Karo-Kari – honour killings, Vani—girl’s tradeoff, blasphemous retaliations, ethnic killings, and different kinds of terrorist activities are just a few examples to quote.

Moreover, punishments often convert the casual wrongdoers into hard-liners. Again, wide ranging and indiscriminate punishments create an atmosphere of fear and apprehension, which tends to vitiate initiative and decision-making capability.

What, therefore, we actually ought to ensure is that the crimes which have not been committed shall not be committed. This needs a socio-cultural set-up that has built-in checks to discourage wrong doings.

Documentation:

The first and the most effective step in this direction is to enforce complete documentation of financial transactions in all walks of life. Ours is a cash-ridden society. Most of our day-to-day financial transactions are settled in cash.

This, on the one hand, facilitates embezzlement, and, on the other hand, makes it difficult to lay hand on culprits for want of adequate proof. The underlying temptation encourages swindlers and borderline wrongdoers to adopt wrongdoing as a permanent way of life. Hence, tax evasion, bribe, commission, kick-back, misappropriation, fraud, embezzlement, and all sorts of financial swindling flourish in a cashnurtured society. We have to dispense with this culture if we want to have financial discipline in our ranks.

How to proceed with the documentation process?

Over-bearing rhetoric, tall claims, and ill-conceived, halfbaked or impracticable measures, or the measures pursued with no or low commitment, yield no positive result. Money, time, and energy spent on them go down the drain. These rather add one more layer of frustration to the morale of an already dejected nation. Thus, what is needed is just one bold step to turn the corner. It should be self-contained and self-controlled, that is to say, a one-time action that needs no monitoring or follow up for being incessantly operative.

A two-fold action, as under, shows adequate potential to take up the glove with success.

1. Financial transaction in cash in excess of the prescribed amount should be declared illegal through an Act of Parliament. More precisely speaking, no debt or financial obligation, public or private, for amount exceeding the prescribed amount, paid in cash, should be recognized in law as paid or discharged. In other words, no coins and / or currency notes in circulation should remain legal tender for exchange of goods and services and for settlement of

Omission

Corruption has two faces: one, the wrong doing i.e., commission; two, the wrongful undoing, i.e. omission. The former means to have done what should not have been done. It is by nature visible. The latter signifies not to have done what should have been done. It is by nature invisible, and therefore tends to be more disastrous.

The commissioning part of corruption can be identi-

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March 2012

S ocial Issues fied, prevented, controlled, and brought within the ambit of law. The other facet of corruption, i.e. omission, is outrageous for the reason the law finds itself helpless in attacking it.

The inaction, dereliction, or delayed action ends in greater devastation, as its effect is not quantifiable; its impact cannot be measured. It may take as great a toll as loss of half of the country and may still remain unidentified. It cannot be controlled or countered by law or by administrative orders. You can stop a man from doing a thing but you can not make him do a thing over a period of time, if he is not willing to do it.

Some of the auxiliary steps that tend to fortify the impact of the main proposal are outlined below. (i) Excessive security of job has been mainly responsible for inefficiency. This must be done away with. Excesses of management may be checked and controlled by Service Tribunals which should be mandated to award judgment within the specified maximum time. (ii) Trade unions have done immense harm to industry.

These should be banned. Effective Service Tribunals should be sufficient to take care of the interest of the employees. (iii) Seniority should be the main deciding factor for prestigious placements and postings and promotions.

Reasons of super-session should be advised in writing to the aggrieved person. (iv) Punishments and rewards should be prompt, judicious, and transparent. (v) All sorts of perks for all categories of staff, irrespective of grade and rank, must go. Transport provided to an executive due to the nature of his job should be used strictly for official purposes only.

What is actually needed is the basic revision of service rules by an Act of parliament, eliminating the provisions of allowances and perks, so that future governments may not be able to reverse the decision simply by administrative orders without getting through the parliament. (vi) Some other causes of inefficiency and corruption in government offices are lengthy and cumbersome procedures; undue secrecy of government businesses; and centralization of powers. Services of professional organizations may be utilized to ameliorate and simplify procedures, which when done may be widely publicized so that people should know what they are exactly required to do. (vii) Speculative schemes, such as prize bonds scheme, that create easy money and encourage all sorts of dubious practices should be banned straightaway.

Sannan Steel International IMPORTER & EXPORTER H.R,C.R, G.P, Colour Coils & Iron Steel Products Dealer: Pakistan Steel Mill

493 Shadman 1 Lahore, Pakistan Tel: 0423-7659692 Fax: 0423-7666314

E ducation & Training Wall Street: the secrets fresh graduates don’t know

F

or nearly a century, Wall Street – the bastion of capitalism – has remained the subject of books authored by a variety of writers ranging from financial experts to historians because it has symbolized capitalism and its power.

Despite the recent tragedies inflicted by those who control the US and global financial systems while operating from its tall buildings, Wall Street continues to decide the fate of the US (and therefore the global) economy and successive US administrations.

Quite understandably therefore, it has remained the biggest attraction for business graduates from universities all over the globe. But now that Wall Street has also become part of the title of a global movement against capitalism i.e. “The Occupy Wall Street” movement, tables may be turning. The reason therefor is a wide variety of half-truths marring the image of Wall Street because those who adore the offices on it as well as those who left those power centres or got kicked out of them, refuse to speak about what goes on there. Wall Street banks do everything that they can to drum into their employees the importance of not talking to the press – that’s the key pre-condition to keep their jobs intact.

The dictum of omerta is so powerfully reinforced that even after bankers and traders are no longer employed on the Wall Street, they stick to this “party line”, which is often sealed by contractual obligations about not discussing publicly what (loot, is it?) went on in the offices of their former employers.

Sacked bankers and equity, debt, and hedge contract traders are often forced to forego unvested options, and can be laid off without any severance pay, unless and until they sign a “release” document by which they agree not to pursue any claims through legal arbitration. Rarely does an investment banker dare speak of his experiences at his former office as did Erin Callan, the short-lived former chief financial officer of Lehman Brothers, and Mark Maybell, the former head of media and telecoms banking at Merrill Lynch.

The disclosures they made were stunning in giving the future business graduates an inkling of what they could be asked to do by their employers on Wall Street. Partly, what has made the problem so vexing is the way the all powerful Wall Street firms structure their compensation packages.

Unlike all other listed companies, besides the monthly salaries, most banks and financial service providing firms on Wall Street pay employees whopping year-end bonuses that, until now, have been between 50 and 60 cents out of every dollar of revenue generated by front-liners. Such odd compensations packages turn human beings into something closer to machines, in fact slaves: they therefore do everything they are rewarded to do without asking questions about the integrity or morality of what they are asked to do. On the Wall Street, bankers and traders are rewarded to generate revenue, be it advising on Mergers and Acquisitions, Collateralized Debt Obligations or on trading in derivatives.

Since operators on the Wall Street were never ever held accountable for the damageing fallout of the recessions

their greed-inspired activi- Such compensaties caused globally (until tions turn the on-going recession that young gradubegan in 2007 and triggered drafting of the Dodd-Frank ates into to malaw), the front-line staff chines, in fact only expected hefty perslaves: they do centages of the revenue they generated, no matter what they are how it hurt the rest of the paid to do, not world. ask questions How much control banks and financial service offer- about the integing firms exercised on their rity or morality front lines has been disclosed by a recent Bloom- of what they are asked to do. berg study. According to its data, over 200,000 Wall Street employees lost their jobs in 2011. According to Gary Goldstein, co-founder and president of Whitney Partners (a financial services recruiting firm) many of those dismissed in 2011 were in the clerical or back office positions. But almost 40,000 were high level bankers or traders at the managing director or Vice President levels–a ‘transaction oriented’ lot– that doesn’t have skills that are easily transferable, impliedly, business graduates with experience of the market mechanics.

An obvious ethical solution to grappling with a low-revenue earning environment–whatever be its causes–is reducing pay across the board. But that is not the way operators on Wall Street look at this problem. They would rather layoff enough front line staff to keep the pay obscenely high for their top brass (that stays on) instead of reducing the pay for everyone to minimize employee layoff. This is ensured by an unethical though ongoing practice; those who opt to work on the Wall Street have to agree to shameful terms of employment; their employment agreements, almost always, stipulate deep down in the text that employees forsake their right to seek a court trial against sacking except on the basis of discrimination.

To make matters worse, the top brass continues to enrich itself at the cost of the rest. The disgraced chief executives of the Wall Street firms, that almost plunged world economies into the financial abyss, not only escaped liability for their actions, but also walked away with a bundle of what can only be described as “loot”. Jimmy Cayne, former chief executive of Bear Stearns, left with about a $400 million fortune. Dick Fuld, former chief executive of Lehman Brothers, pocketed about $500 million though he tried to make the US Congress believe it was closer to merely $300 million. Meanwhile, Stan O’Neal, the former chief executive of Merrill Lynch during whose tenor the firm built a huge base of toxic collateralized debt obligations, left Merrill at the end of 2007 with as much as $140 million. But the fate of the 40,000 business graduates who acquired skills over years of hard work that aren’t easily transferable, got nothing in terms of severance packages.

34 38 36

March 2012

R esearch & Development Underground Coal Gasification

by Tariq Iqbal Khan

P

akistan is one of the countries which is facing huge energy deficit. Scientifically all energies are interconvertible. If we have one type of energy we can obtain the other type through conversion, although some energy is lost during such conversion.

Electricity can be produced by using heat energy which can be obtained by: (a) burning fossil fuels (including natural gas) (b) burning coal and lignite (c) Any other material such as solid waste Solar power is also obtained by converting the solar heat energy into electric energy. The mechanical energy from wind mills is transformed into electrical energy. In Hydro-electricity the gravitational force is used to produce mechanical energy which in turn is converted into electric energy. Nuclear power is also obtained from heat energy generated through nuclear explosion.

Pakistan has a large resource of hydro-electric power but due to certain political differences, the country could not develop this source after construction of Tarbela Dam and Ghazi Brotha project. Ghazi Brotha is a good example of hydroelectric generation with least environmental impact and virtually no migration of population. The natural gradient has been used by diverting the water through a canal which has resulted in a reasonable head downstream of the same river (Indus). Pakistan, except the potential of hydroelectric power, is deficient in all other sources of energy which could be converted into electric energy. Pakistan produces very little crude oil and the refineries import the crude oil to produce all types of petroleum products.

The natural gas which was also being used as fuel by power projects started depleting after 2003 and substantially after 2008, when the Sui field of PPL faced a steep shortfall, the gap between demand and supply of electricity reached a figure of 6000 MW. The hydroelectricity could have TABLE I Bhasha 4,500 provided a solution but if we start working now (even Bhasha Dam is Dasu 4,320 not expected to complete in the Bunji 7,100 next 5 years) we still need 5 to 6 years before any electricity would Manda 740 be available from such projects.

Akhori 600 The potential of hydroelectricity, Total MW 17,260 with no visible political disputes, is given in Table I

There are some small hydroelectric projects in all the provinces and Azad Jammu and Kashmir which are not being listed here.

Although installed capacity as shown by PEPCO is around 20,000 but actual production of electricity suffers badly as most of the projects cannot produce upto their installed capacity as a consequence of cash flow problems due to Circular Debt.

Hydroelectric power is by far the cheapest source of electric energy. As the energy mix upto 70’s consisted of a major portion from hydroelectricity hence the tariffs were also reasonable and the Industry performed well in 60’s and 70’s.

At present the total hydro power capacity is 32% while the rest is based on thermal generation, except 2% from nuclear sources. As the crude oil started increasing exponentially from 2004 onwards, Pakistan started facing all types of issues.

Many countries produce electricity from coal. India used to produce major portion of their needs from coal. Pakistan is also deficient in coal resources. The pattern of production and imports is given in Table II below:

TABLE II Production of Coal (000 tons) Year

Imports

Production

Total

2001-02

950

3,095

4,045

2002-03

1,081

3,328

4,409

2003-04

1,578

3,312

4,890

2004-05

2,789

3,275

6,064

2005-06

3,307

4,587

7,894

2006-07

2,843

4,871

7,714

2007-08

4,251

3,643

7,894

2008-09

5,987

4,124

10,111

2009-10

4,652

3,738

8,390

Source: M/o Petroleum Natural Resource, Hydrocarbon Development Institute of Pakistan

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March 2012

R esearch & Development It is noteworthy that although the consumption of coal has increased from 4,045,000 tons from 2001-02 to 8,390,000 tons in 2009-10 but production has increased marginally while the rest had to be imported.

The energy consumption by source is given in Table III: With production of natural gas TABLE III coming down and hydroelectricOil 29.1 ity very far, Pakistan can only resort to produce electricity Gas 43.7 from coal. Although the electricity produced would be cheaper Coal 10.4 even from imported coal as compared to high sulfur fuel oil Electricity 15.3 and furnace oil but it would be more economical if Pakistan L.P.G. 1.5 could extract coal from domestic resources.

100% The coal mining in Pakistan has not been developed upto the desired levels. Small quantities are being extracted in Punjab and Baluchistan but the Sind Province has large coal resources which are still untapped.

According to the estimates published by Global Mining, China there are 10 blocks of minable reserves covering around 1000 sq. kilometers and the estimate of coal reserves is around 30 billion tons. There is, however, another debate in the mining circles which is that the Thar coal is in fact lignite which is inferior than coal.

constructed very close to any mines such as in Australia’s Latrobe Valley and Lumnant’s Monticello plant in Texas.

Primarily because of latent high moisture content of brown coal, carbon dioxide emissions from traditional brown coal fired plants are generally much higher than for comparable black–coal plants, with the world’s highest-emitting being Hazelwood Power Station, Victoria. The operation of traditional brown-coal plants, particularly in combination with strip mining, can be politically contentious due to environmental concerns.”

As generally lignite is suitable to produce electricity hence we do not go into this debate. However, another debate going on in the country regarding Thar coal is, whether it is minable or not. According to the sources of SINO Sindh Resources (Pvt.) Limited, a wholly owned subsidiary of Global Mining China, Thar coal is minable. An extract is reproduced below published by their CEO in Daily Dawn, Karachi “First of all, Thar coal is minable – there is no question about that. Though I tend to agree that open-pit mining is expensive, international coal prices have recently risen to levels which justify such large investments. Even in an open-pit mining scenario, the net price of raw coal works out to less than $7 per million British Thermal Unit (mmbtu), which is almost 35% of the price of residual fuel oil (the most commonly used fuel in Pakistan).

Secondly, Thar coal fields probably provide the most abundant hydrocarbon resource. Collectively, the 10 blocks can produce more than 100 million tons per annum of lignite coal which will be sufficient to generate 15,000 megawatts of electricity. In fact, the production capacity can easily be multiplied by a factor of five if incremental investments can be attracted to the mining of these blocks. The same coal can be briquetted and exported to consuming countries within the region.

Thirdly, Thar coal is of acceptable quality. Those who say that it is of bad quality do not know the business deeply.

Net calorific value of Thar coal is around 11,000 kg which is acceptable internationally.

No one denies the high moisture content of Thar coal, but with the current state of technology the moisture can be significantly reduced by a drying process and its heating value will increase to around 19,000 kg which will make Thar coal equivalent to most coal qualities traded between Indonesia, China and India.

Brief characteristics of lignite

“Lignite, often referred to as brown coal, or Rosebud coal

by Northern Pacific Railroad, is a soft brown fuel with characteristics that put it somewhere between coal and peat.

It is considered the lowest rank of coal; it is mined in Germany, Poland, Kosovo, Russia, the United Sates, India, Australia and many European countries, and it is used almost exclusively as a fuel for steam-electric power generation. Up to 50% of Greece’s electricity and 24.6% of Germany’s comes from lignite power plants. Lignite is brownish-black in color and has a carbon content of around 25-35%, a high inherent moisture content sometimes as high as 66% and an ash content ranging from 6% to 19% compared with 6% to 12% for bituminous coal.

Lignite has a high content of volatile matter which makes it easier to convert into gas and liquid petroleum products than higher ranking coals. However, its high moisture content and susceptibility to spontaneous combustion can cause problems in transportation and storage. It is now known that efficient processes that remove latent moisture locked within the structure of brown coal will relegate the risk of spontaneous combustion to the same level as black coal, will transform the calorific value of brown coal to a black coal equivalent fuel while significantly reducing the emissions profile of ‘densified’ brown coal to a level similar to or better than most black coals.

Western World Activity

Although Underground Coal Gasification(UCG) activities have been undertaken in a number of countries, the FSU (Former Soviet Union), the majority of activity in the West has been focused in the USA. Beaver et al., summarised this activity, which became more intense after 1972. They tabulated some 28 different individual tests at 11 different locations over the period 1967-1988. It is estimated that over the entire period of the US test programme, approximately 50,000 tons of coal was gasified – approximately 0.3% of Krenin’s 1992 figure for the FSU. In Australia, the commercial potential for UCG received some attention during the 1980s, as a result of international

Uses

Because of its low energy density and typically high moisture content, brown coal is inefficient to transport and is not traded extensively on the world market compared with higher coal grades. It is often burned in power stations

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March 2012

R esearch & Development interest in the process and the high oil prices of the 1970s.

Funds were provided by a Federal Government grant for an evaluation of the significance of the UCG process for Australia. This work was directed by the late Professor Ian Stewart of the University of Newcastle, who drew heavily on the Russian experience in recommending that the technology be developed in Australia.

This evaluation led to a feasibility study in 1983 into the economics of developing a UCG facility at the Leigh Creek mine in South Australia, with combustion of the product gas in a gas turbine. The study concluded that electricity could be produced at a competitive price using the UCG process; however, no further funds were made available for development of the proposed facility.

A news item had been published in the newspapers of Australia on March 01, 2011 that the Queensland Government and Department of Environment and Resource Management (DERM) stopped all activities in respect to UCG plant of Cougar Energy through a notice dated 28th January, 2011 except decommissioning rehabilitation and monitoring activities. Earlier in 2010 the Queensland Government stalled the process of public issue saying that public finances should only be involved once the project starts commercial production.

An Extract is being reproduced below.

Is underground coal gasification a sensible option?

By Kurt Zenz House / 29 March 2010 “There is a lot of coal in the ground. In 2006, the U.S. Energy Information Agency estimated that global coal reserves (i.e., the total quantity of coal that can be economically produced), stood at roughly 840 gigatonnes. That is enough supply for the world for more than 130 years.

If an additional 4 trillion tonnes were extracted without the use of carbon capture or other mitigation technologies atmospheric carbon -dioxide levels could quadruple – resulting in a global mean temperature increase of between 5 and 10 degrees Celsius.

Recent developments

Apart from completion of the Spanish test in 1997, there was little or no evident interest internationally in UCG in the 1990s, probably consistent with the then low oil price of less than US$ 25/bbl. However from 1997, a team of experts led the development of a successful UCG pilot test at a site near Chinchilla, Queensland. The pilot test ran from 1999 to 2002 before it was shut down for lack of commercialized finance.

Since completion of the Chinchilla pilot burn, particularly in the past few years, there has been quite a remarkable acceleraReserves, however, are tion in international a notoriously misUCG activity and the leading matrix. Strictly number of developspeaking, reserves are mental projects being the quantity of a investigated. At a confercommodity that can be ence held in Houston in economically produced June 2007, papers were at current prices and presented on potential with current technolprojects in the Majuba ogy. Over time, reserve coalfield in South Africa estimates tend to (ignition successfully increase because both completed), Kingaroy in the price of the comAustralia (site characUnderground Coal Gasification Process modity and the techterisation planned), nological ability to recover that commodity change. If the Powder River Basin in the USA, and Alberta, Canada as well market price increases, for example, while the recovery cost as reference to specific projects in India and Pakistan. decreases, the reserve base will increase. So, reserves are a The South African project is operated by Eskom, which lower-bound estimate of the total resource that exists. In supplies more than 90% of the country’s power requirethe case of coal, if we were to include coal seams that are ments (221,000 GWh in 2006). Ignition of the coal seam currently too deep for conventional mining, then global occurred on 20 January 2007, with UCG technology being coal reserve estimates would probably increase by an order supplied by Ergo Energy Technologies Inc. of Canada. of magnitude. But this raises two vital questions: The project is planned to be developed in a series of stages (1) Will it ever be economical to extract such additional to ultimately produce 2100 MW of power using UCG gas coal; in a combined cycle power plant. The Kingaroy project, operated by Cougar Energy Ltd., is currently in the site (2) If it were, is it a good idea to do so? characterization stage and also involves Ergo Energy TechLet us take these questions in order. nologies as technology supplier. Ignition was planned for Deep coal seams are labelled unminable because the cost of mid-2008 with an ultimate 400 MW proposed power extraction outweighs the value of the coal itself. But there generation. Current update on this project is not available is a way to harness the potential energy stored in the coal on their website.

41

March 2012

R esearch & Development

without mining for it. Specifically, coal can be gasified underground, and the products of gasification can be extracted through wells in a manner similar to the extraction of natural gas. Coal gasification involves a process known as partial oxidation, a form of combustion that occurs when there is insufficient oxygen. During gasification, coal, oxygen and water are combined in the appropriate ratios such that the carbon in the coal is converted into carbon monoxide and the hydrogen in the water is converted to hydrogen gas. A key element of this process is that the carbon is not converted all the way to carbon dioxide. The product of this reaction, a mixed gas of carbon monoxide and hydrogen, is known as syngas, which is widely used as feedstock for producing chemicals (such as fertiliser) and also can be burned to generate electric power.

How is coal gasified underground exactly? First an appropriate quantity of oxygen (or air) and steam is injected into a coal seam through vertically or horizontally drilled wells.

This combination of gases will, in turn, gasify the coal. The syngas can then be extracted through separate production wells that are drilled “downstream” of the original injection sites.

In effect, such a process amounts to starting a controlled fire underground, which sounds dangerous. But, if done properly, it is not. Controlled underground coal gasification projects are intentionally set below the water table, meaning they can be extinguished by simply turning off the injection of air and/or steam. When the injection stops, the surrounding groundwater flows back into the coal seam and extinguishes the burn. (Thar coal has water between the seams) Now, the second question: Is underground coal gasification a good idea?

It has been estimated that around 4 trillion tonnes of otherwise unusable coal might be suitable for underground gasification. If true, then the economic development of this process would expand coal reserves by a factor of about five.

Such an expansion would be both good and bad. From the perspective of maintaining a prodigious and affordable energy supply, gasification would be a boon. But from a climate change perspective, it could be a nightmare. If just current conventional coal reserves were fully combusted, the concentration of atmospheric carbon dioxide would approximately double. But if an additional 4 trillion tonnes were extracted without the use of carbon capture or other mitigation technologies, atmospheric carbon-dioxide levels could quadruple – resulting in a global mean temperature increase of between 5 and 10 degrees Celsius.

Underground coal gasification coupled with carbon capture and storage, holds the promise of producing an effectively limitless supply of low-carbon, fossil-fuel derived energy.

While the economics of underground gasification are not yet obvious, several studies – including an excellent pair by Julio Friedman of Lawrence Livermore National Laboratory – suggest that under the right circumstances the economics could be very attractive. There are several reasons why the economics look good. For instance, doing the gasification underground obviates both the very expensive surface gasification facilities and the coal handling equipment. Indeed, according to Friedman, syngas produced through underground gasification is 25-50 percent less expensive than surface-produced syngas. Furthermore it is easier and more efficient to transport gas than it is to transport solid coal.

Underground coal gasification has been pursued for nearly a century and today there are nearly 20 such projects in various stages of planning and development. Eskom, a South African utility company is planning to build a 201 gigawatt combined cycle plant to be run entirely on syngas from underground gasification. China and India are also aggressively pursuing research and development of underground gasification.

Underground gasification paired with carbon capture and storage technology has the potential to provide significant quantities of clean coal-derived energy. But without carbon capture, the climate would be put at severe risk. It is therefore vital that development of underground gasification be done in tandem with development of carbon capture technologies. The alternative could be disastrous.

Kurt Zenz House

House is the Chief Executive and a co-founder of C12 Energy. For nearly a decade, House has studied the physics, chemistry and economics of capturing and storing anthropogenic carbon dioxide in ways that will ensure that carbon dioxide does not enter the atmosphere. He has published numerous scientific papers that have been cited over 140 times.

Leonard Keith Walker

42

Institution of Engineers, Australia.

LK Walker is the CEO of Cougar Energy, Australia. Following is an extract from his publication in the magazine of Institution of Australia.

“Research, development and operational activity in the FSU (Former Soviet Union) continued strongly through to the 1960s, but declined towards the end of that decade. Gregg in a review, for the US Government, of Soviet work in UCG, March 2012

R esearch & Development attributed this decline to the discovery of large resources of natural gas and the effort required for associated pipeline construction. They also estimated that the replacement cost of all the research, development and operational work undertaken in the FSU to that time might be as much as US$ 10 billion.

While the magnitude of this expenditure is massive, of perhaps equal importance in today’s context is the expertise gained in handling variable geological conditions. On this matter, Gregg concluded that experience in the FSU provided the design capability to operate in a predictable manner and to transfer this capability between sites with quite different geological features.”

Dr Farid Malik ,who claims to be part of Thar coal project since 2004, has written an article published in the Nation on January 11, 2012 and News Post of January 06, 2012: “The claims of the nuclear scientist have to be audited by a team of experts. Dr. Samar Mubarakmand has been pursuing the UCG approach since early 2009 and has consumed around Rs. one billion of Federal Government and Rs. 35 million of Punjab Government with no meaningful output. The entire Thar coal development effort has been misdirected. Coal is being gasified all over the world after mining in controlled reactors above ground.”

A letter was pulished in response to the above “This is with reference to Dr. Farid A Malik’s article ‘Misleading Claims’ which appeared in the News Post on January 06. If we are short of expertise in handling the coal mines in our country, we can ask for China’s help considering China’s unparalleled progress in the field of energy innovation. China’s progress in the power sector is driven by a combination of government mandate and direct investment. Their efficiency in the power sector has been increasing by nearly 10% every year. Such mandates have been matched by requirements for sulphur-emission control and cleaner water, the closure of many lowefficiency coal mines and new investment in solar, wind and other renewable power. China’s 12th 5-year plan, introduced earlier last year, added goals for developing clean technology indigenously. Mostly, these innovations will be for domestic use, although there is a growing interest in international markets for clean technology. Two agencies are responsible for overseeing compliance. First is the National Energy Administration(NEA), which approves the financing and construction of virtually every large energy project. Second is the Ministry of Science and Technology which runs more than 100 Chinese academies that conduct clean-tech research. A Chinese power company,

Huaneng, probably the largest in the world, generates about 160,000 megawatts of power.

Every year, it adds 13,000 megawatts of new generation.

To meet the government’s many cleanenergy man-dates, Huaneng plans to install windmills capable of generating 10,000 megawatts and solar panels capable of generating 10,000 megawatts of hydro power and 10,000 megawatts of nuclear power.

Beyond producing energy, this company has designed and built two major indigenous clean-coal techno- logies in the last decade. The first is a gasifier that turns coal into synthetic gas with high efficiency and ultra-low pollution.

The second is a new-capture technology that strips CO2 out of coal plant emissions. It is distressing to learn that even after wasting three years, as stated by Dr. Farid Malik in his letter, we have been unable to identify as to what kind of technology will be suitable for the gasification of coal mines in the Thar area. In case the team headed by Dr. Samar Mubarakmand cannot achieve the desired results, it is strongly recommended that we should get assistance from the Chinese government. By having partnerships with Chinese companies we can get technical and financial assistance for exploring minerals in the Balochistan and Sindh areas. We should also send our engineers and scientists to obtain the latest mineral-related knowledge from these energy firms. We should not waste time and take immediate steps for exploration of our mineral resources for the benefit of our future generations.”

CONCLUSION

Pakistan is in dire need of energy and all the growth would be stalled if Pakistan does not address this issue properly and without any further loss of time. It seems that there is a hideous confusion about the process of UCG. In spite of my best efforts I could not find one project being run on commercial basis. The Cougar Energy, Australia, has not given any update about its Project after 2008. Eskom, South Africa have claimed success but no details are available on their website. Their technology suppliers are Canadians in Alberta.

Rather than reinventing the wheel Pakistan has two choices. (i) To get the UCG technology from Canada which is ahead of other countries as both Australia and South Africa have obtained technology from Canada. (ii) To obtain open pit mining assistance from China which have probably indicated the same.

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March 2012

Awan Trading Co.

is Pakistan based Coal trading entity which was incorporated in the year 2002. The company started its operation as an importing company and for the last two years it has also started supplying domestic coal (Pakistan coal). So far the company has imported and supplied 5 million tons of coal, from South Africa and Indonesia, to the cement factories.

This opportunity of supplying coal to cement factories was created due to their (Cement factories) shift from furnace oil to coal as the main energy fuel. Since then the company has been sincerely committed in its mission of

supplying coal to factories as a source of energy. What you sell is important! So we source our Coal from best suppliers around the world. Developing longterm relationships has been the hallmark of our company. Our promise that “we deliver, no matter what the situation� has earned us, the confidence of our buyers.

The success of our trading can be gauged from the fact that we are now importing 21 vessels (1 million ton) of coal in a year which as resulted in 30% market-share for Awan Trading Co and hopefully the share will increase in the coming years.

A griculture Pesticide Poisoning - A Matter of Concern

by Sajid Iqbal, Riazuddin, Sahar Aman, Muhammad Abbas, Mubarik Ahmed ntroduction: The chemical pesticides are the most impor- Current Situation in Pakistan: Information on pesticide poisoning in Pakistan is limited despite the fact that it is the tant and consistently-applied tool of pest control. After the predominant method of suicide among the rural population World War II, these pesticides proved to be highly instrumental and thousands of such cases are reported to the hospitals to protect the agricultural crops from pest attack and are widely every year. This excludes the accidental exposure to pestibeing used all over the world for crop protection. DDT was the cides leading to death, disabilities, neural and hepatic first synthetic insecticide, developed in 1940s. It was initially damages etc. Storage of pesticides in the houses without used to combat malaria, typhus, and the other insect-borne necessary precautions leads to accidental exposure, particudiseases and for insect control in crops and livestock. Later on, larly when these are within easy access of children. Such it proved to be an effective weapon to control insects in crops domestic storage of pesticides also facilitates intentional and livestock which led to the commercial production of series poisoning involving huge population in the rural areas. The of pesticides all over the world. Presently, this industry markets effects of these hazardous pesticides on human health with pesticide worth billions of US dollars all over the world. The a number of symptoms are depicted in Figure-2. It is key producers are China, India, France, USA and many others.

Pesticides use in Pakistan In Pakistan, chemical pesticides evident that among all, vomiting is one of the major symptoms that is common in 25% patients affected by pesticidal were first used in 1950s to control locust attack. In 1954, more poisoning. It has also been reported that indiscriminate use than 0.25 thousand tons of formulated pesticides were of pesticide in Pakistan has led to higher residues in the imported in the country, which marked the beginning of the agro-based products including fruits, vegetables, milk, meat pesticides business in Pakistan1. During 1990 to 2010, there etc. It is believed that in Pakistan, the incidence of pesticide was a consistent increase of insecticides import in Pakistan as poisoning may even be greater than reported due to underdepicted in Figure-1. It has been reported that in the year 2011, reporting, lack of data and misdiagnosis. pesticides worth about Rs. 28.4 billion were imported in the country.

Figure-2: Major symptoms of poisoning to pesticides3

I

Hazards of pesticides: The pesticides are largely used to

protect crops like cotton, rice, wheat, sugarcane, maize, vegetables and fruits orchards from insects and other pests. It is doubtless that enormous benefits have been obtained as a result of pesticides use in all the agricultural sectors. However, the indiscriminate and excess use of pesticides by the unskilled personnel has posed serious concern to the public health and the environment. World Health Organization in 1986 reported that about 2.9 million people get effected every year with 2,20,000 fertilities due to pesticide poisoning3. In developing countries the situation is more severe and due to a number of reasons sufficient and reliable data related to pesticide poisoning and its effect on human and animal life is not available.

According to some estimates, 25 million cases of pesticide poisoning take place every year in the developing countries1.

45

Despite the known effects of some of the pesticides to human and their role to create environmental disbalances, the use of pesticides in Pakistan has increased more than ten times in the last 20 years. The numbers of sprays in some of the crops has exceeded more than 10. It is primarily a result of pressure on farmers to maximize their production. In addition, uncontrolled sale of pesticides, lack of systematic awareness programs at farmers’ level, permit them to increase the use of pesticides without any consideration of environmental pollution and toxicity to animal and human life. Another dimension of the problem is associated with the spurious pesticides available in the local market. These pesticides generally originate from China, India, Taiwan, Singapore and Belgium. In addition, despite the fact that though many pesticides are officially banned some of them are still available in the local market, being smuggled from neighboring countries.

Despite the known effects of some of the pesticides to human and their role to create environmental dis-balances, yet the use of pesticides in Pakistan has increased more than ten times in the last 20 years. The numbers of sprays in some of the crops have exceeded more than 10. It is primarily a result of pressure on farmers to maximize their

A griculture production. In addition, uncontrolled sale of pesticides, ack of systematic awareness programs at farmers’ level, permit them to increase the use of pesticides without any consideration of environmental pollution and toxicity to animal and human life. Another dimension of the problem is associated with the spurious pesticides available in the local market. These pesticides generally originate from China, India, Taiwan, Singapore and Belgium. In addition, despite the fact that many pesticides are officially banned some of them are still available in the local market. These banned pesti- Table-1: Pesticide residues in fruits and cides are vegetables in Pakistan s m u g g l e d Location Year Total % contamination from neigh- Islamabad 1981-84 48 48 (100%) boring coun- Karachi 1988-90 250 93 (37%) tries.

NWFP 1990-91 154 54(35%)

Some analytical Islamabad 1990-91 96 48 (50%) studies for the Quetta 1992 50 19 (39%) p e s t i c i d e Faisalabad 1982-97 298 108 (36%) residues in fruits and vegetables have been conducted in different interval of time in 80’s & 90’s and found more than 30% of these samples are contaminated. Similarly, in 2008-09 different fruits available in local market of Karachi, were tested in laboratory for level of contamination of pesticides. It was found that more then 50% fruits were found to have contaminated in Karachi. Based on these results, the consistency in exceeded contamination in fruits can be extrapolated. Some of the studies for determination of pesticide residues in water, soil, crops and human in Pakistan have been summarized in term of pesticides occurrence and geographical distribution in the results, the consistency in exceeded contamination in fruits can be extrapolated. Surveys carried out by PARC between 2005 to 2007 exhibited a very alarming situation and is shown in Table-3. It can be seen that among the fruits mango and citrus were the most contaminated commodities with pesticide residues to exceed 34 and 27.6 percent of the maximum permissible limit (MRL). Among the vegetables cauliflower, lady figure and chillies ranked at top position with MRL exceeding about 37 percent. The pesticide residue levels with other vegetables can also not be considered satisfactory and the situation requires a serious consideration to protect human and animal life.

Steps to be taken: However, the importance of pesticides can not be overlooked but, there is a strong need to familiarize farmers about health hazards associated with the pesticides and the focus should be to minimize the use of pesticides in the crops or design some other means to protect the crops from unacceptable and dangerous levels of contaminations. There is no single method that can be applied under all situations. It is therefore essential to adopt an integrated approach for an effective and economical pest control.

In the absence of implementation of any effective pest management system and awareness campaigns, the farmers and consumers should be enlightened for taking self-protective measures. In Pakistan, a high percent of people are under the risk of pesticides or have been affected due to lack of knowledge of possible hazards of these agro-chemicals. The issue needs attention and implementation on priority basis; else the problem may aggravate and become more serious.

The integrated Pest Management (IPM) can be the best alterna-

Table - 2: Fruits samples contaminated, available in local market of Karachi (report 2008 - 09) S. No. Fruits Number of Samples samples contaminated Apple 21 17 (86%) 1.

Apricot 5 2 (40%) 2.

Persimmon 5 3 (60%) 3.

Banana 16 8 (50%) 4.

Chiku 5 3 (60%) 5.

Citrus 10 7 (70%) 6.

Grapes 5 2 (40%) 7.

Guava 11 5 (45%) 8.

Mango 5 4 (80%) 9.

Melon 20 11 (55%) 10.

Papaya 4 4 (100%) 11.

Peach 5 5 (100%) 12.

Plum 5 2 (40%) 13.

Pomegranate 3 2 (66%) 14.

Table-3: Pesticide residues contamination in food commodities Product Wheat Rice FRUITS Citrus Apple Mango VEGETABLES Spinach Cauliflower Lady finger Brinjal Tomato Chillies

NO. of samples analyzed 40 05

% Exceeding MRL* NIL NIL

226 115 189

27.6 19.0 34.0

85 195 104 59 44 76

28.0 42.0 39.0 34.0 24.64 37.0

tive to assure more sustainable and environment friendly control of pests of important corps. Some technologies are already available and have been successfully demonstrated on a large scale to control pests of various crops. IPM is designed to work with the combimation of various control tactics including biological control, growing resistant varieties, altering the sowing time, crop rotation and clean cultivation of crops.

Though the success of IPM has been proved in Pakistan but unfortunately these technologies have never been practised in perpetuation, because of many reasons that include illiteracy, misconceptions in farmers to obtain quick results, lack of political interest for IPM implementation and government’s pesticide oriented agricultural policies etc. etc. There is a need to switch over to safe procedures if we need to protect our lives that are under serious threats of ailment and fatalities.

References:

1. Health Hazards of Pesticides in Pakistan, May 2000 2. http://www.senate.gov.pk/qa/74/02-11-2011.pdf 3.Policy and Strategy for Rational use of Pesticides in Pakistan, FAO – 2001 4.www.finance.gov.pk/survey/chapter_10/02_Agriculture.pdf 5. Pak. J. Bot., 43(4): 1915-1918, 2011 6. M.I. Tariq et al. / Environment International 33 (2007) 1107–1122 7.Studies on monitoring of contaminants in exportable food commodities, ALP Report, 2005 – 2007, Pakistan Agricultural Research Council

46

H ealth Growing vegetables with sewage sludge & industrial waste in Karachi

K

Salmonella and Escherichia coli O157 in food. Studies show that the recent outbreaks are linked to lettuce, spinach and tomatoes.Varied sources of contamination includes the application of organic waste to agricultural land as a fertilizer, use of contaminated waters for irrigation that carries fecal material, direct contamination of crops by livestock, wild animals and birds, postharvest malpractice etc. Surveys reports of raw agriculture produce indicate the wide range vulnerability of these products for the growth of microorganisms including human pathogens (Report of the scientific committee on food). Bacteria such as Clostiridium botulinum, Bacillus cereus and Listeria monocytogene are natural inhabitants of many soils and are capable of causing spoilage of agricultural crops. Whereas Salmonella, Shigella, Escherichia coli and Campylobacter resides in the intestinal tract of animals and humans, and are likely to contaminate raw fruits, vegetables and other food material by through contact through feces, sewage and untreated irrigation water.

In some research studies it is advised to refrain from having SALAD for immunocompromised patients, such as those that undergoes hemopoitic cell transplantation for minimizing the risk of infections through oral intake of Gram-negative bacilli such as Pseudomonas aeroginosa. In a recent study at PARC, Karachi it was found the level of microbial contamination in leafy vegetables was upto 105 c.f.u/gm, while in case of non-leafy vegetables the levels were low upto 102c.f.u/gm (tomato, lady finger and cabbage). It was also found that there is adirect relation between the microbial contamination of vegetables and quality of irrigation water being used in Karachi. It was also found that sewage discharges contains levels of fecal contamination upto 1100MPN/ml in Malir, ASF . and Sharafi goth field. This water has not been processed through sedimentation or filtration or chemical treatment. This level of faecal contamination is hundred times more to international standards of safety.

More alarming condition in some areas of Malir and Sharafi goth have also been is witnessed where industrial waste that carries toxic metals is being mixed with the irrigation water.

Metals are naturally found in the body and are essential to human health. Iron (Fe) prevents anemia, and Zinc (Zn) is a cofactor in over 100 enzyme reactions that take place in our body. These are generally present in low concentrations and are known as trace metals. In high doses, these metals may become toxic to the body or produce deficiencies. The excess availability of trace metals can be problematic, high levels of zinc can result in copper deficiency, another metal required by the body for its metabolism. But some of these are heavy or toxic metals with a density at least five times higher than water. As such, they are stable elements and cannot be metabolized by the body. Some of these metals are bio-accumulative and can be passed though the food chain to humans. These include: mercury (Hg), nickel

arachi is a densely populated city of Pakistan. Being port city with more job opportunities people from all parts of the country migrate to Karachi in search of better opportunities. It is estimated that population of city has exceeded fifteen million.

The overcrowding, poverty, inadequate sanitary conditions and poor general hygiene have become the major causes of food-borne infections in the city. Presence of nutrients in foods are necessary requirement for human but at the same time these nutrients are also a food for “microbes� and their multiplication beyond acceptable limits is subject to microbial deterioration and food spoilage. It is well known that quality of food products is badly influenced with the presence of microbial toxins and pathogens. According to an estimate, in industrialized countries as many as 30% people suffer from food borne diseases each year. it was estimated that in year 2000 at least two million people died due to diarrheal diseases worldwide.

Most of the reported fatal outbreaks were found to be associated with bacterial contamination. Among these Salmonella and E.coli O157 in sprouted seeds and fruit juices were found to be of particular concern.

In Pakistan, the available data on food-borne diseases is loosely organized and represents laboratory isolates that do not reflect the actual ratio of food borne infections in the counA, Influenza virus; B, West Nile Virus; try; however, a few C, Staphylococcus aureus; D, Streptococcus pneumoniae community-based reports provide evidence of several outbreaks caused by Salmonella, Shigella, E.coli and Listeria. Recent evidences of food borne disease outbreaks associated with the consumption of fresh vegetables have instigated to assess the effect of contaminated irrigation waters being used in Karachi and its suburbs for cultivation of vegetables.

Besides other detrimental effects such as metal contamination in soil and food, irrigation water containing raw or improperly treated sewage sludge mixed with industrial waste may likely be a source of many pathogens, with Shigella and the enteric viruses (hepatitis A virus, Norwalk-like viruses, rotaviruses) being perhaps the most significant. Research conducted earlier also reveals that irrigation water contaminated with animal fecal matter can also be a major source of pathogens in fresh produce.

Growing of vegetable particularly with sewage sludge and industrial waste in some areas of Karachi has increased the risk of contamination of heavy metals and microbial spoilage such as infection with enteric pathogens viz

47

March 2012

H ealth

Microbial toxicity may be reduced by allowing the waste water sedimentation and by separating its solid and liquid parts. Composting of solid portion of waste in open environment where temperature reaches upto 70째C may be lethal for most of the pathogenic bacteria. On the other hand effluent of the waste after filtration and disinfection may be used for the irrigation.

B- Post Harvest: Sorting and washing of fresh fruits and vegetable may be done to minimize the hazards. After washing dipping in alkali, sulfuring or blanching may be done depending on the nature and type of vegetables. Product washed with water, not treated with a chemical disinfectant, may become a source of microbial contamination if reused. IFPA, 2001, suggested the need for chemical disinfectants. The addition of a chemical disinfectant further reduces the microbial load. These chemical sanitizers can therefore reduce microbial contamination of subsequent batches processed in the same re-circulated wash water system. However, it is important to recognize that such reductions, although important, are not sufficient to assure microbiological safety of minimally processed fresh-cut vegetables. Currently, sodium hypochlorite is the most commonly used chemical sanitizer in produce wash water. A large number of alternative water sanitizing compounds which are used in reducing microbial populations in fresh-cut produce include; chlorine dioxide, ozone , electrolyzed water, hydrogen peroxide, organic acids, peroxyacetic acid, trisodium phosphate, and radiation. Other augmentative or substitute disinfection techniques investigated have included; high pressure, pulsed electrical and magnetic fields, ultra-violet and pulsed light, irradiation and ultrasound.

Future recommendations Collaborative basic and applied research activities accompanied with proper education regarding hazards, training of human resource involved in the food chain should be adopted. It is essential that basic recommendation of hygiene principle from farm to the end consumer, effective surveillance programs, quantitative microbiological risk assessments, cost-benefit and environmental impact assessment, epidemiological studies, dissemination of the information through workshops, conferences should be conducted. . In Karachi and other big cities where vegetables are cultivated wit sewage water a wastewater lagoons, activated sludge process, and rotating biological contactors are needed for municipal waste water treatment. Guidelines for designing such infrastructure may be obtained from model of bio-remediation plant developed and installed at NARC/PARC, Islamabad. Moreover establishment and implementation of effective GAP, GMP and HACCP programs covering all aspects of growing, harvesting, packing, transport, processing, and distribution should be followed to save the consumers health.

(Ni), lead (Pb), arsenic (As), cadmium (Cd), aluminum (Al), and copper (Cu). Studies confirm that heavy metals can directly influence behavior by impairing mental and neurological function, influencing neurotransmitter production and utilization, and altering numerous metabolic body processes. Breathing heavy metal particles, even at levels well below those considered nontoxic, can have serious health effects. Virtually all aspects of animal and human immune system function are compromised by the inhalation and intake of heavy metals. Presence of these metals is not a problem if the concentration of these metals is within the permissible limits as specified by the W.H.O. Source of contamination in fields of Karachi may be the sewage sludge which contains significant amounts of nitrogen and phosphorus as well as heavy metals such as copper and zinc. The application of sewage sludge at a controlled rate does improve the physical and chemical properties of soils because sludge typically possesses excellent soil amendment properties. At higher concentration levels it may pose a risk to soil, water, plants, animals or public health. The same constituents in sludge that benefit the soil and crops may also produce detrimental effects if they are applied at excessive rates or under improper conditions. Continuous application of wastes tends to accumulate large quantities of heavy metals in soil which are ultimately passed on to the plant tissue and the humans resulting in several types of ailments. High levels of metal contamination in some samples of vegetables collected from fields of Malir which are irrigated directly with sewage sludge have been found. Reports showed that accumulation of Cadmium (0.0390.372 ugg-1), Lead (2.28-4.10 ugg-1) and Arsenic (0.08-0.241 ugg-1) in these samples exceeded by three hundred percent of the permissible limits by W.H.O. Measures to minimize the risk of contamination: Application of good hygiene practice during production, transportation and processing combined with the HACCP system can certainly minimize the contamination of fruits and vegetables and reduces the risk of illness associated with food.

A- Pre Cropping: under conditions water used for irrigation purpose contain waste from industrial and domestic sector. Industrial waste is more hazardous due to the presence of complex chemical, heavy metals and salts which if once entered in the irrigation channels and ultimately in plant system may cause long lasting hazards to the end consumers. These are very difficult to detect until and unless a particular disease symptom becomes evident. Restricting cropping or mixing of fresh ground water with industrial and domestic waste by proper proportions may be the only pre-cultivation measure to restrict the toxic heavy metals from entering into plant system.

48

March 2012

E vents Myth of the financial market revealed

A

ceremony was held at the Institute of Business Administration, Main Campus, Karachi, to launch the book “Financial System & Economic Development – Pakistan” Volume II by Dr. Shakil Faruqi”.

The auditorium at IBA echoed with a big round of applause when Dr. Ishrat Hussain, Dean & Director IBA, welcomed and congratulated the author on his exposition of the securities markets in generic terms, dimensions and operations in real world setting and their structure in Pakistan.

In his introductory remarks, Dr Ishrat Hussain said, "It is Dr Faruqi's love for finance and banking which has led him to make the working of this sector comprehensible to the ordinary people of Pakistan; he is a man indeed not to sit idle!”

He said that there is a great need for such publications in local markets, especially in the field of finance where the forces at play are unique to the society. He appreciated Dr. Shakil Faruqi on taking a lead in this genre.

Mr. Muhammad Saleem Umer, Director, Executive MBA at IBA, recounted some of the remarkable achievements of the author.

Thereafter, the floor was open to a panel of renowned finance experts present at the occasion including Mr. Riaz Riazuddin, Chief Economic Advisor, State Bank of Pakistan, Mr. Tariq Hussain, Former Head of Learning Center, World Bank and Mr. A.B. Shahid, Former Chief Representative, National Hatton Bank of Sri Lanka. They appreciated the author’s work and dedicated efforts in producing a book which is unique in that it is a blend of theory and its application relevant to the financial system of Pakistan.

Brief review of the book was then presented by the author, Dr. Shakil Faruqi. He said his students knew about the US Federal Reserve more than they knew about the State Bank of Pakistan(SBP) because the textbooks they used were generally written by American authors. He read out an excerpt from the new volume and said “I hope that this will help the finance

Staff Report

Dr Ishrat Hussain presenting a bouquet to Dr. Shakil Farooqi while Mr. A. B. Shahid Is giving his review of the book

A view of participants of the event

49

sector in learning from my experiences of nearly three decades with operations of financial system in comparative setting”.

The first volume of the book has chapters on the financial system, interest rate, financial savings, credit system, monetary management, etc. The second volume has chapters on the financial market, securities market, assets, yields, returns, trading in derivatives, capital market, long-term debt market, stock market, portfolio financing, and Islamic banking etc.

What are securities markets in generic terms? What is their structure in Pakistan and what are their dimensions? How securities markets operate in real world setting? What is financial regime; how it regulates market operations, and how effective it is?

What is the state of financial system infrastructure supportive of market operations? How significant are these market operations? Dr. Shakil Faruqi has answered these questions and several others in his book, Financial System and Economic Development – Pakistan Volume II. How far this effort has succeeded, that is left to the readers to determine.

Dr. Shakil Faruqi is currently teaching at Lahore School of Economics. He has M.A in Economics from University of Pennsylvania, USA and Ph.D in Economics from Rutgers University, USA. Dr. Faruqi worked at the World Bank from 1972-1997. He led major training programs in banking and finance, established training facilities, programs and faculties in Central Asian Republics and managed large Technical Assistance Projects for the Financial System and Securities Market Development.

For the period 2000-2003, Dr. Faruqi was Advisor to the Governor, State Bank of Pakistan. He organized and managed training in Central Banking and Financial System Management; launched Changed Management activities at the State Bank, and activated NIBAF, Islamabad Training Institute of SBP. His major publications include; ‘Glossary: Banking and Finance, English-Urdu/Urdu-English’, ‘Financial Sector Reforms in LAC and Asian CountriesLessons of Comparative Experience’, 1993; and ‘Financial Sector Reforms. Growth and Stability’, 1994.

March 2012

50

E vents 9th ITIF Asia 2012

9

th ITIF Asia 2012 ‘International Trade & Industry Fair’ was held at Karachi Expo Center during 21-23 February 2012. The event aimed at focusing on the immense potential of industrial machinery tools equipments, automotive power plants, industrial machinery equipment, and heavy metal working machines. It incorporated Engineering Asia, Auto & Transport Asia, Oil & Gas Asia, Alternative Energy & Power Asia, Machine Tool & Hardware Asia, and Fire & Security Asia Organized by Ecommerce Gateway Pakistan (Pvt) Ltd. ITIF Asia is Pakistan's only Trade & Industry Fair approved by UFI, the Global Association of Exhibition Industry, France.

The event was inaugurated by Sindh Information Minister Shazia Marri. There were 28 international and domestic exhibitors and 51 foreign delegates from 11 countries, including Iran, Italy, Germany, Australia, Turkey, Canada, India & UAE. According to the organizers, the show attracted about 25,000 visitors. Entry in the exhibition was restricted only for Trade/Corporate Visitors. The event provided a single marketplace where local and international manufacturers showcased their latest products in technology and design, and facilitating establishing new contacts, renewing old ties and exchanging ideas.

Speaking on the occasion, Shazia Marri said that provincial power policy will be announced soon while a detailed report on Thar coal is expected in the next two months.

Talking to media persons after the inaugural session, she said that power policy will offer incentives to foreign investors and opportunities for skilled Pakistanis.

Responding to a question, she said that Iran was cooperating with Pakistan in energy sector and providing help to overcome energy crisis.

A Workshop on “ICT in Power & Energy” was also held in the event. Dr. Syed Aun Abbas, Chief Executive Officer - National ICT R&D Fund, Ministry of Information Technology, Government of Pakistan was the Chief Guest. The purpose of the workshop was to explore existing / potential role of ICTs in the sector. The audience included power sector decision makers / IT professionals, IT companies, academia, relevant ministries / departments, industry, trade associations and chambers of commerce.

Achievements, potential, funding opportunities, initiatives and implementations of ICT in Power & Energy Sector were brought into limelight. The Speakers included Mr. Nadeem Qureshi, Program Coordinator - Renewable Energy Society of Pakistan; Engr. Rukhsana Zuberi, Chairperson, Women In Energy Pakistan; Mr. Irfan Yousuf, Deputy Director (CDM) – Alternative Energy Development Board (AEDB); Mr. Muhammad Naveed Khan, Manager (Energy & Environment Cell), Pakistan Hosiery Manufacturers Association; Engr. Haroon Simon,Executive

Sindh Minister for Information, Shazia Marri inaugurated the "ITIF Asia 2012" event along with Arif Allauddin, CEO Alternative Energy Development Board (AEDB) and President Ecommerce Gateway, Dr. Khursheed Nizam.

51

March 2012

E vents Re-Orientation Workshop

P

ak Oman Microfinance Bank arranged a re- orientation workshop for its customer relation managers, on 8th February, 2012, at Karachi. The workshop was conducted by Mr. Ozair A. Hanafi, Founder President, Ozair Hanafi School of Learning (OHSOL). Mr. Munawar Suleman, President & CEO, Mr. Ozair A. Hanafi, and Pak Oman Microfinance Bank Mr. Munawar Suleman. was also present.

The workshop comprised four sessions. In the session on “Power of Positive Mental Attitude”; Mr. Hanafi gave examples of Nelson Mandela, Muhammad Younus and Dr. Akhtar Hameed Khan, to inspire the participants towards a healthy positive attitude.

The second session focused on Client Selection for Microfinance Bank. In the session the CRMs were asked on how they interacted with their customers. Importance was placed on customer connection, building the right relationship, retaining this relationship and ultimately enhancing it in a manner that the customers become advocates.

Session three proved to be another interactive session where the CRMs were asked to discuss their credit approval procedure. This session emphasized on the banks current procedures on monitoring and evaluation.

The fourth session aimed at providing the participants with an understanding of the concepts of ethics and morality, and the importance of these concepts in business. It underlined a fundamental shift in the way we look at the very purpose of business.

The concepts: “Know Your Customer” and “Know Your Banker.” were also discussed. Mr. Hanafi concluded the session by emphasizing on trust and truth, and how these two principles satisfy the customer, which in turn lead to growth, productivity and profitability.

Engineer, Siemens Pakistan Engineering Co. Ltd. and Mr. Muhammad Zaid Azam, CEO - Sara Solar Pvt. Ltd. The representative of Marine Motor Services, a German manufacturer of components for large-bore, four-stroke diesel engines, said that they had received positive, yet less-than-expected, response at ITIF Asia 2012. “We’ve a limited target market. Suppose there are 25 customers out there, only one has visited us so far,” he said. However, he said that they are not extremely disappointed with the event as they are participating in this exhibition for the first time and it may take some time to build their brand name in the Pakistani market.

Visitors took great interest in the alternative energy concepts such as wind energy and solar powered energy products exhibited in the event. Solar powered irrigation tube wells, street lights, solar panels and home energy solutions were exhibited during the show. In the era of power shortages and rising costs of fuel for generators, solar powered tube wells could be a perfect solution for the farmers. Diesel generators cost more than 25 Rupees per Kwh to generate electricity.

Due to this high cost of electricity and the very high maintenance costs of generators many farmers are losing a lot of money due to unavailability of water for irrigation. These solar powered water pumping stations can be used for tubewells, home use, drip irrigation, livestock watering and other related purposes. These solar powered outdoor lights are well-suited for use in metropolis as well as remote locations and hard-to-access places where utility grid electricity is not available or is costly to install. Other wind powered energy solutions exhibited in the show can also be adopted to decrease the dependency on convential power sources.

Center (L to R): Mr. Ozair A. Hanafi, Mr. Munawar Suleman and the participants from Pak Oman Microfinance Bank.

52

March 2012

C ommodity Review February -2012

I

n the month of February 2012, an upward trend has been observed across the globe among commodity markets. Spot gold hit a fresh three-month high around $1,790 an ounce on Wednesday, while spot silver held steady around $36.90 an ounce after surging more than 4 percent and reaching a five-month high of $37.21 on 28th of February. Further, oil is set for its first monthly gain in three, as sanctions tighten against Iran, OPEC’s second-biggest producer. During February-2012, the traded volumes at the Exchange increased to Rs. 70.7 bn from Rs. 42.8 bn in the corresponding month of the previous year, a growth of 65 %

PMEX Commodity INDEX PMEX COMMODITY INDEX 3,150

Traded Volume(Rs) Traded Lots

3,100 3,050 3,000 2,950 28-Feb

25-Feb

22-Feb

19-Feb

16-Feb

13-Feb

10-Feb

7-Feb

4-Feb

1-Feb

2,900

Open: 2,939 Close: 3, 115 Change: + 5.99 %

Feb. 2012 Feb. 2011 70.7 billion 42.8 billion 125,772 295,749

Mar. 2011 52.8 billion 157,592

Low: 2, 924 High: 3,115

GOLD [USD / t Oz] GOLD US $/t Oz 1,790 1,770 1,750 1,730 28-Feb

25-Feb

22-Feb

19-Feb

16-Feb

13-Feb

10-Feb

7-Feb

4-Feb

1-Feb

1,710

Open: 1,744.70 Low: 1,715.90 Close: 1,788.00 High: 1,788.00 Change: + 2.48 % Gold was on course to gain for a second month in a row in February ahead of the expected injection of nearly half a trillion euros by the ECB, seen as designed to buy more time for European politicians to resolve the region's debt woes.Spot gold hit $1,790.16 an ounce, its highest since mid-November, before edging down to $1,786.29 by 0730 GMT, up 0.1 percent. Gold is up 2.8 percent so far this month.

During Feb-2012, the traded volumes at the Exchange increased to Rs. 50.7 bn from Rs. 12.2 bn in the corresponding month previous year, a growth of 314 %

SILVER [USD / t Oz] SILVER US $/t Oz 38 37 36 35 34

Open: 33.80 Close: 37.44 Change: + 10.77 %

28-Feb

25-Feb

22-Feb

19-Feb

16-Feb

13-Feb

10-Feb

7-Feb

4-Feb

1-Feb

33

Low: 33.18 High: 37.78

Silver hit a five-month high and its rally quickened pace after it broke above recent highs near $35.70, a resistance that had failed to breach several times since September.

Silver is by far the best-performing precious metal this year with a 32 percent gain. Last year, it posted a 10 percent loss after prices corrected sharply from a record near $50 an ounce set in April.

Holdings of the world's largest silver exchange-traded fund rose 22.7 tonnes on Monday, and are up 109.8 tonnes since the beginning of the year. In the same period of 2011, they fell 255.2 tonne Max price was $ 37.78 an ounce on 28th of February and min price $ 33.18 was observed on 16th of the month. A rise of 10.77 % has been observed in February, 2012.

During Feb-2012, the traded volumes at the Exchange increased to Rs. 6.20 bn from Rs. 5.8 bn in the corresponding month previous year, a growth of 8 %

53

March 2012

C ommodity Review CRUDE OIL [USD / barrel] CRUDE OIL US $/aBarrel

28-Feb

25-Feb

22-Feb

19-Feb

16-Feb

13-Feb

10-Feb

7-Feb

4-Feb

1-Feb

110 108 106 104 102 100 98 96

Open: 97.28 Low: 96.59 Close: 107.20 High: 109.81 Change: + 10.20 % Oil rose, heading for its best month since October in New York, amid signs of economic recovery and concern that tension with Iran threatens global crude supplies.

Oil prices will run up further as U.S. economic data remains supportive, and Iran and Syria continue to give cause for supply-side worries,� said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, who earlier this month correctly predicted Brent crude’s rise to $120 a barrel.

During Feb-2012, the traded volumes at the Exchange decreased to Rs. 13.6 bn from Rs. 24.8 bn in the corresponding month previous year.

IRRI 6 [Rs. / 100 kg] IRRI-6 RS/100 kg

Open: 3,030 Low: 3,000 Close: 3,235 High: 3,235 Change: + 6.77 % In the domestic market an upward trend in prices has been witnessed in the month of February. Price movement remained in a slightly wider band, Maximum price was Rs 3,235 per 100 Kg on last trading day of month and Minimum price was Rs 3,000 per 100 kg on 3rd of February.

A rise of 6.77 % has been observed so far.

3,225 3,175 3,125 3,075 3,025 28-Feb

25-Feb

22-Feb

19-Feb

16-Feb

13-Feb

10-Feb

7-Feb

4-Feb

1-Feb

2,975

PALMOLEIN [Rs. / 37.324 kg] PALM OLEIN RS / 37.324 kg

Open: 4,660 Low: 4,640 Close: 4,975 High: 4,985 Change: + 6.76 % A continuous rising trend has been witnessed for palm olein prices here in domestic markets in the month of February, 2012. Max price Rs 4,985 was on 28th of February and Min price was Rs. 4,640 per 37.324 kg on 2nd of month was noticed. A rise of 6.76 % has been observed so far.

5,000 4,900 4,800 4,700

28-Feb

25-Feb

22-Feb

19-Feb

16-Feb

13-Feb

10-Feb

7-Feb

4-Feb

1-Feb

4,600

54

March 2012

S tock Market Monthly Stock Market Review

T

he benchmark KSE-100 Index ended the first week at 11,982.62 points, up just 0.19%WoW, by gaining 22 points or 0.19 percent with market remaining largely range bound. Average daily volume contracted by 37%WoW to 91.77mn shares in the absence of the much-awaited SRO on recently announced CGT concessions.

Positivity was felt in second week by local equity market, as the benchmark KSE100 crossed the psychological level of 12,000 points and maintained (closed at 12,232pts,).

Investors’ confidence was restored and average daily traded volumes shot up to 170mn shares (up 85% WoW) while average traded value stood at USD58mn (up 11% WoW). The euphoria in equities primarily came in on the back of re-affirmation from the SECP chairman with respect to the agreed proposals given to the FBR and Ministry of Finance (with regard to CGT-related issues that were already accepted by the Ministry of Finance) dispelling speculations on the implementation of the same within the identified time with sufficient clarifications.

This positive development greatly outstripped Moody’s and IMF’s concerns with respect to Pakistan’s politics and economy (primarily related to the external and domestic challenges including low economic growth, notorious circular debt, and double-digit inflation amongst others).

IMF pointed out the need to tighten up the monetary policy in the wake of re-emergence of inflation, while despite concerns Moody's maintained its 'B3' rating for Pakistan. Foreign investors also showed increased confidence in Pakistan equities and placed USD 5.97mn net against USD 2.23mn net last week.

Positivity continued to shower its blessings towards capital market on third week, as the KSE-100 index gained 264 points during the week to close at 12,450 pts (up 2.2%WoW). Despite no change in policy rate, positivity came out after FBR officials visited stock market and CDC to review the CGT collection mechanism. Investors took it as a step towards realization of Finance Minister’s promises for equity market reforms. Meanwhile, discussions with India on MFN status and trilateral talks between Pakistan, Iran and Afghanistan also supported market activity as leading sectors landed in green. Iran has agreed to extend trade with Pakistan to USD 10bn and showed its interest to provide oil to Pakistan on deferred payments. On economic front, due to substantial rise in imports, trade deficit in 7MFY12 stood at USD13.17bn (up 39.8%YoY), which was somewhat supported by remittances which showed a growth of 21.54% to USD 7.44bn (up 38%MoM to USD1.11bn), Average traded volume during the week stood at 175mnshares (down 3.2% WoW), The Karachi Stock Exchange (KSE) market movement was bullish last week and positivity remained continuous and KSE – 100 index crossed the psychological level of 12,700 points which is the highest level achieved since last 10 months. KSE – 100 Index has reached 12,707 points by gaining of 257 points or 1.69 per cent. Volumes were also better and reached up to 322 million shares which were the

55

by Zeeshan Ahmed Mirza

Top 10 Traded Companies(Feb 2012) Company Open Close Diff High JSCL ANL DGKC FCCL LPCL BAFL BOP FATIMA NBP PACE

5.57 3.4 23.19 3.78 2.09 12.2 5.64 21.94 43.37 1.52

9.58 6.33 28.03 4.45 2.52 13.68 7.65 23.89 51.39 2.38

4.01 2.93 4.84 0.67 0.43 1.48 2.01 1.95 8.02 0.86

11.08 8.42 28.8 5.1 2.78 14.45 9.85 24.65 53.19 2.66

Low Avg.Rate Turnover* 5.62 3.44 23.07 3.78 2.03 12.12 5.55 21.82 43.06 1.51

8.87 566,745,941 5.96 285,715,970 25.55 218,806,776 4.38 207,003,930 2.36 152,055,616 13.08 149,838,126 7.22 127,424,198 23.2 122,007,000 47.56 118,793,371 1.88 99,207,157

Top 10 Gainers(Feb 2012) Company Open Close Diff High Low Avg.Rate Turnover NESTLE 3,177.74 3,500.46 322.7 3,507.40 3,120.00 3,315.19 ULEVER 5,394.95 5,650.00 255.1 5,800.00 5,211.00 5,467.16 UPFL 1,629.25 1,797.41 168.2 1,800.00 1,700.00 1,749.38

2,835 9,469 613

COLG 691.75 797.25 105.5 800 700 741.12 RMPL 2,599.95 2,700.00 100.1 2,940.00 2,475.00 2,700.73 WYETH 711.01 779.96 68.95 792.61 680.02 734.66

3,494 623 15,192

MTL

426.43

ILTM PICT

160.04 214.02 53.98 214.52 152.11 75.5 111.08 35.58 117 75.5

MFFL

87.5

489.4 62.97 502.94

120 32.5

126

423

84

450.07

575,520

184.39 2,719 97.1 2,155,898 110.97

6,537

Top 10 Losers (Feb 2012) Company Open Close Diff High Low Avg.Rate Turnover* SIEM 865 790 -75 859.25 768.3 810.12 1,017 FFC 186.95 124.26 -62.7 190.95 123.5 182.24 52,594,629 BATA 670.92 649.59 -21.3 750 646 703.7 1,259 SRVI

209.95 193.89 -16.1

AWTX

90

LINDE SHJS AABS ABOT PRL

106.99 69.25 87.17 101.33 65.26

212

191

200

52,270

79.75 -10.3

83.73

83.73

83.73

10

97.04 59.4 78 92.22 56.68

110 71.3 91 107 67.75

92 57.01 76 90 56.01

99.62 63.46 81.07 97.57 62.31

101,090 7,404 122,617 254,963 426,205

-9.95 -9.85 -9.17 -9.11 -8.58

March 2012

S tock Market KSE Performance

Total No. of Listed Companies Total Listed Capital - Rs. Total Market Capitalisation - Rs. KSE-100TM Index

11347.66

TM

10179.03 7856.82 4 16,010.82 6 14,754.80 96.91 3,506.22

KSE-30 Index KSE All Share Index New Companies Listed during the year Listed Capital of New Companies - Rs. New Debt Instruments Listed during the year Listed Capital of New Debt Instruments - Rs. Average Daily Turnover - Shares in million Average value of daily turnover - Rs.

highest level achieved since last 22 months. Despite country’s swelling current account deficits and ever-rising government borrowings and surge in international oil prices, market sentiments remained positive and the benchmark index continued its run-up to 13,000 points. On local front, finance ministry looked realistic to achieve GDP growth of 3.6% in FY12 while PKR also stayed firm against the USD regardless of the IMF repayment of USD417mn on the last day of trading Average traded volumes during the week stood at 240mn shares (up 37% WoW), while average traded value went up by 45% to USD72mn.

On February 29, 2012, Ahsan Mahenti, leading analyst wrote that Pakistan stocks closed bullish this month led by blue chip Oil, fertilizer and banking scrips amid higher trades after apex regulator confirmed reformed CGT regime implementation from April1. Meeting of Tax reform coordination group decided for minimum 120 day holding period with a presidential order on an ordinance.

Bullish sentiments prevailed throughout the month and the index managed to close on its highs amid higher global commodities, easing political outlook and institutional consolidation across stocks by retail & institutional investors.

Strong earnings announcements in banks, oil and fertilizer sector and improvement in Pak-US relations ahead of release of $1.2bn military aid to Pakistan on anticipation of resumption of NATO supplies played a catalyst role in bullish sentiments post major announcements at KSE despite concerns for falling foreign exchange reserves and government debt surpass over $130bn.

Upto 30-12-2011 638 1,048,443.87 2,945,784.51

Average Daily Turnover (FutureTM) YTD Average Value of Daily Turnover - YTD

5.78 611.92

Money Market T-Bills (3mth) 11.7367% T-Bills (6mth) 11.8070% T-Bills (12mth) Rejected Discount Rate 12.00% Kibor (1mth) 12.01% Kibor (3mth) 11.75% Kibor (6mth) 11.80% Kibor (9mth) 12.10% Kibor (12mth) 12.14% P.I.B (3 year) 12.4459% P.I.B (5 year) 12.8089% P.I.B (10 year) 12.9091%

Foreign Portfolio Investment Monthly (Feb 2012) FIPI Local Companies Banks/DFI Mutual Funds NBFC Local Investor Other Organization

Gross Buy (Rs)

Gross Sell (Rs)

5,333,100,893 38,308,082,914 8,296,956,375 6,614,758,638 1,634,486,456 67,897,993,969 1,103,528,093

(4,597,616,088) (38,415,055,335) (9,580,640,001) (7,780,386,930) (1,757,256,104) (65,759,613,961) (1,298,338,918)

56

Net Buy/Sell(Rs) Net Buy/Sell($)

735,484,800 8,172,053 (106,972,421) (1,188,582) (1,283,683,623) (14,263,151) (1,165,628,292) (12,951,425) (122,769,644) (1,364,107) 2,138,380,003 23,759,778 (194,810,821) (2,164,565) March 2012

I nformation Technology Aakash: The world’s cheapest computer gains huge response

A

akash, world’s cheapest tablet pc, launched by India has reportedly evoked tremendous market response with more than 2.1million bookings recorded since it was put on sale online.

The android tablet computer, developed jointly by a London-based company ‘DataWind’ with the Indian Institute of Technology, Rajasthan and manufactured by the India-based company ‘Quad’, was officially launched with the title name of ‘Aakash’ in New Delhi on Oct 5, 2011 under a trial run of 100,000 units @ 2500 Indian rupees or 41 US Dollars per unit. A substantially upgraded second generation model called ‘UbiSlate 7+’ is for pre-book now on company’s official website.

Datawind said it was taken by surprise by the response in India, where Apple`s iPad computers cost a minimum of $600. The company plans to establish three new factories in 2012 to produce 75000 units per month to meet the increasing demand for the tablet. Around 400,000 pre-sales bookings for the Aakash, is more than sales for the entire Indian tablet market last year which were about 250,000-300,000 units.

Datawind, the maker of the world’s cheapest tablet – Aakash says after falling into jeopardy over tablet specifications it need not have to worry, as it has procured retail orders worth over 700 crore Indian rupees, from the open commercial market. The bulk orders are from companies such as Glenmark Pharmaceuticals, Accenture, HFCL, CNet Solutions, Medanta Medicity and Rajasthan Patrika.

A Pakistani IT company, ‘FiveRivers Technologies’ and its mobile applications subsidiary, Pepper.pk, based in Lahore are developing different sort of applications for the UbiSlate 7+ tablet. The Pakistani company will support the Indian government sponsored tablet pc with their over 150 applications to the new platform. Pepper.pk’s award winning portfolio of applications includes three World #1 titles, including the four-time ‘AppWorld’ #1 app, Photo Editor.

Talking to “Value Chain” Mahe Zehra Husain, Co-Founder of Pepper.pk stated that she wants to see friendship and cooperation in South Asia, and in that spirit, she will add value to Aakaash and enrich it with her company’s leading software products. “Information Technology is critical to both our countries as it can be a powerful force to reduce poverty and eliminate illiteracy”, she said adding that the process of developing applications is in progress and will be uploaded on web in a couple of months.

Pros. & Cons.

With all the benefits like low price, small size and weight, memory card slot (32 GB support) and efficient processing, the device has its own technical defects such as low quality touch screen, low battery life, and limited apps reach which could decrease the current hype of this tablet pc. However, many UbiSlate 7+ users praised the processing speed as compared to the previous version (Aakash).

Air Mouse: Click the new way…

S

tudies have shown that excessive mouse usage can cause repetitive stress injuries.

There are alternative styles of mice out there designed to be easier on the hands and arms. One of the more interesting ones is the ‘AirMouse’, made by Canadian firm Deanmark Ltd. What makes it unique is the fact that users can wear it like a glove.

The wireless mouse utilizes an optical laser, and can run for a week without recharging.

According to the company website, the clinically-tested product works by aligning itself with the ligaments of user’s hand and wrist. This lets users keep their hand in a neutral position, and transmits more of their vector force than would be possible with a regular mouse. Not only does this make it easier on user’s hand, but it increases their mousing speed and accuracy as well. The mouse is also designed to remain inactive until user’s hand is placed in a neutral, flat position, so that they can easily go back and forth between typing and mousing. Other ergonomic designs have strayed from the AirMouse’s style of traditional flat, one-dimensional mousing, but Mark and Oren’s market research indicated that consumers tend to reject such products.

57

March 2012

S cience Lab-grown blood transfused into human body successfully

Man controlled robotic hand with thoughts

A

O

ccording to recent reports from the World Health Organization, the number of blood donors worldwide is decreasing, while the global need for safe blood of all types continues to rise. Blood is running out. But there is a solution. Now doctors can make a backup blood supply by Red Blood Cell bioengineering stem cells to produce blood cells. This transfusion method is already in use right now. Artificial blood will become a common reality in near future, after the first successful transfusion of lab-grown blood into a human body.

Using hematopoietic stem cells (hematopoeitic stem cells are the cells that give rise to all blood cell types) from a human donor, a team of researchers led by University of Paris's Luc Douay has managed to generate billions of red blood cells and inject them back into the donor's body.

Luc Douay, extracted hematopoietic stem cells from a volunteer's bone marrow, and encouraged these cells to grow into red blood cells. Douay's team labeled these cultured cells for tracing, and injected 10 billion of them (equaling 2 milliliters of blood) back into the donor's body.

After five days, 94 to 100 percent of the blood cells remained French Professor Luc Douay circulating in the body. After 26 days, 41 to 63 percent remained, which is a normal survival rate for naturally produced blood cells. The cells functioned just like normal blood cells, effectively carrying oxygen around the body.

This is a great news for international health care. "The results show promise that an unlimited blood reserve is within reach," says Douay. The world is in dire need of a blood reserve, even with the rising donor numbers in the developed world. This need is even higher in parts of the world with high HIV infection rates, which have even lower reserves of donorworthy blood.

A patient in need of a blood transfusion would require 200 times the 10 billion cells that Douay and his colleagues used in the test. Robert Lanza, one of the first people to grow red blood cells in a lab on a large scale, suggests using embryonic stem cells, which could generate 10 times the amount grown by Douay.

The successful transfusion is a hugely important step in finding a solution to blood shortages, used everywhere from accident scenes to surgeries to battlefields. “The results show promise that an unlimited blood reserve is within reach," says Luc Douay. It can also provide red blood cells, helping patients especially in regions with high HIV infection rates such as Africa that have lower reserves of donor-worthy blood.

ver the years, there have been marked developments in neurology and robotics. A group of European scientists has now achieved success in further bio-tests as they connected a robotic hand to an amputee, allowing him to feel sensations in the artificial limb and control it with his thoughts.

A 26 year old Italian, Pierpaolo Petruzziello, who had lost part of one arm in a car accident, was the focus of a successful revolutionary experiment that allowed him to "feel" his robotic hand. The patient was able to control the movement of his hand with his thoughts and could replicate complicated movements that have never before been achieved with a prosthetic device. "It's a matter of mind, of concentration," said Petruzziello. "When you think of it as your hand and forearm, it all becomes easier," he added.

By implanting neural interfaces called “LIFE Electrodes” in the median and ulnar arm nerves (the ulnar nerve is a nerve which runs near the ulna bone in hand. The ulnar collateral ligament of elbow joint is in relation with the ulnar nerve.) of a subject with an amputated upper limb, researchers from “Università Campus Bio-Medico di Roma” and “Scuola Superiore Sant’Anna di Pisa” succeeded in connecting the patient’s brain with a biomechatronic prosthesis equipped with five independent fingers.

The project is named as “LifeHand” and is costing about 3 Million US Dollars, funded by the European Union. The research took five years to complete and produced several scientific papers that have been published or are being submitted to top journals. The experiment was an important step forward in creating an interface between the nervous system and prosthetic limbs; the challenge now is to ensure that such a system remains intact for years and not just a month.

The next phases of the LifeHand project will involve repeating the experiment on other volunteers, for assessing its repeatability and testing the effectiveness of the LIFE electrodes as neural interfaces.

Future work will include both miniaturizations, optimization of electronics for development of an optimized biomechatronic hand (similar in weight and dimensions to a natural hand).

Since the LifeHand project is still underway, it will be possible to assess any benefits for the candidate only in the medium to long-term. In case the next experimental phases are successful, the Pierpaolo will be the first person able to use, free of charge, the most recent version of cybernetic hand prosthesis.

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March 2012

H istory Anarchism: is it madness or the craving for change

T

o the French theoretician Sebastian Faure, “whoever denies authority and fights against it is an anarchist.”

The definition is tempting in its simplicity–a trap that should be avoided; it can lead to a grave error. Anarchism, nihilism and terrorism are often wrongly equated, but Faure’s definition of anarchy at least marks out the area in which anarchism exists.

Anarchos, a Greek word, means merely ‘without a ruler’.

Thus anarchy itself can be used in a general context to mean either the negative condition of unruliness or the positive condition of being ‘un-ruled’ since rule is unnecessary for preservation of order; what is imperative is a code of commonly practiced values. Historically though, anarchism is a doctrine posing a criticism of the existing society; a view of a desirable future, and means of passing from one to the other. Any unthinking revolt does not make an anarchist, nor does philosophical or religious rejection of earthly power, but the route anarchism takes is always that of social rebellion, violent or otherwise.

The terms ‘anarchy’ and ‘anarchist’ were first used during the French Revolution to condemn political adversaries, usually on the left who were labelled as ‘Enrages’. In 1793, Girondin Brissot went on to define anarchy but ended up defining its causes by saying “laws that aren’t carried into effect, authorities without force and despised, crime unpunished, property attacked, safety of the individual violated, the morality of the people corrupted, no constitution......”

What he was defining was the state of affairs during anarchy.

A few years later, Brissot attempted another definition of the anarchists. This time he defined them as “men covered with crime, stained with blood, fattened by rapine, enemies of the laws they don’t make, preach liberty and practice despotism, speak of fraternity yet slaughter their own brothers... tyrants, slaves, servile adulators of clever dominators who subjugate them....., capable of all excesses, baseness, and all crimes.”

In 1840, in his famous book “What is property”, PierreJoseph Proudhon explained the causes of democracy by pointing to the distortions in the society saying “just as the right of force and the right of artifice retreat before the steady advance of justice, and must finally be extinguished in equality, and the sovereignty of the will yields to the sovereignty of reason and must at least be lost in scientific socialism........ As man seeks justice in equality, so society seeks order in anarchy. Anarchy –the absence of a master or a sovereign–such is the form of government to which we are everyday approximating.”

Proudhon was the inventor of anarchism who was later joined by Bakunin, Kropotkin, Godwin, Stirner and Tolstoy who evolved anti-governmental movements without accepting the name of anarchy; it was a system of social thought aimed at fundamental changes in the structure of society but especially the replacement of the authoritarian state by some form of non-governmental

59

cooperation between free men.

In essence it was a rejection of the state’s existing profile.

But in the mind of neo anarchist thinker the idea of destruction was the lone strategy. That was why, in his book “Reaction in Germany” Bakunin said “passion for destruction must also be a creative passion”. Spanish anarchist Buenaventura Durutti wrote “we are not in the least afraid of ruins. We are going to inherit the earth. There isn’t the slightest doubt about it; the bourgeoisie may blast and ruin its own world before it leaves the stage of history. We carry a new world, here in our heart. That world is growing this minute.”

Tolstoyans forbid violence under all circumstances. Godwin wanted change through discussion, and Proudhon through a peaceful proliferation of cooperative organizations, and even Kropotkin reluctantly accepted violence as the valid route to reform. In his considered view “bloody revolutions are often necessary, thanks to the human stupidity; yet they are always a monstrous evil, and a great disaster, not only with regard to the victims, but also for the sake of purity and perfection of the purpose in whose name they take place.”

Historically, whenever anarchists did adopt violence as their strategy, it had more to do with their reluctant adherence to the traditions set by earlier revolutions–English, French, and American–violent popular movements in the name of liberty, that they shared with other movements of their time i.e. Jacobins, Marxists, Blanquists, and followers of Mazzini and Garibaldi, but anarchists were essentially agents of change.

In his book “Modern Science and Anarchism”, Kropotkin writes “anarchists conceive a society in which all mutual relations of all its members are regulated, not by laws, not by authorities, whether self-imposed or elected, but by a mutual agreement between the members of that society, and by a sum of social customs and habits–not ratified by law, routine, or superstition, but continually developing and continually readjusted in accordance with the ever-growing requirements of a free life stimulated by progress of science, inventions, and the steady growth of their ideals.”

What has happened since is, that anarchists have been often penetrated by criminals, extremists that want to impose their religious codes (e.g. Al Qaeda and the Taliban), and agents of former imperial powers (the latest in Libya). True anarchism has been sidelined; instead, as in the 16th and 17th centuries, it has become the target of critics who brand the anarchists as criminals, but the blame lies with the anarchists because it is their organizational failure that landed them in that trap. In the US and the EU, the “occupy” movement lacks a strategy, is leaderless, disorganized, and does not have in its ranks that committed and eloquent class that can convince the masses about the otherwise right cause the movement is pursuing. I gathered that impression by talking to scores of protestors at London’s St. Paul Cathedral last December. That is tragic.

March 2012

A rt & Literature Whitney Houston – a pop legend

Madhubala – the goddess of charm

W

M

hitney Houston, the great six Grammy Awards winning American singer passed away on February 11 – the day the Grammy Awards -2012 were to be distributed. Her death shocked every musician and singer who was there for the ceremony. How great a star she was is proved by the fact that in her life-time, she sold over 170 million records, a feat not achieved by many singers.

Her hits included “How will I know,” “Saving all my love for you,” and “I will always love you.” Of the 6 Grammy awards she won, one was for “I will always love you” and the other for the album entitled “The bodyguard.”

Whitney Houston was part of a family of singers that included her mother Cissy Houston, a gospel singer, and Dionne Warwick, her cousin. At the age of 19, while performing at a New York night club, she was spotted by Clive Davis of the Arista Records connecting them in a life-long professional partnership. With a ferociously powerful voice and a dazzling range thereof, she achieved stardom as a pop singer known as “The Voice” and “Queen of Pop.” She also starred in two hit films viz. “Waiting to Exhale” and “The Bodyguard.”

While singing remained her first love, she also pursued social causes with vigour, and was a supporter of the anti-apartheid movement and South Africa’s legendry Nelson Mandela, for whose sake she campaigned while he was in jail. She actively campaigned for youth projects and would go up to the White House for these causes. Besides these efforts, she also set up a foundation to fight illiteracy globally.

As she scaled up the ladder of stardom beginning 1985, she made a grave mistake–getting married to another singing star –Bobby Brown, whom she later on described as emotionally abusive. Her family problems led her to becoming a cocaine addict and 1991 onwards until her death she struggled with substance abuse, which took a toll on her health and career.

In a TV talk show in 2009, Oprah Winfrey told her that her voice was a national treasure, and that some people thought she had squandered it. Terror-struck, she could only whisper “that’s heavy.” It is odd that in 1985 at her second concert at the Carnegie Hall in New York, the key line of the song she sang to a packed hall of admirers was “I am changing”.

According to the LA Times, before her death, she was acting erratically during an appearance at the rehearsal for Grammy Awards party. While she greeted visitors with a warm smile, she seemed dishevelled, had unmatched clothes on, and had dripping-wet hair – all uncharacteristic of her. Drugs, it was clear, were having a lethal effect on her. Although by 2009, it was visible that her voice suffered from “drug-ravaged” thinness, she was and will remain a singer worth listening to.

adhubala, a legendry film actress of India, was born on February 14, 1933. It is sad that she died on February 23, 1969. In the 36 years that she spent in this world, she acted in 72 films, in six of them as a child artist and in 66 as the film’s heroine; that‘s a record of its own kind, un-paralleled as yet. What she has left behind in an effort lasting just about three decades, is a treasure that people still love to watch.

How versatile roles she could play is portrayed in her movies Tarana, Mr&Mrs 55, Chalti ka nam gari, Nirala, Nadan, Mahal, and Mughl-e-Azam; they became legends because Madhubala did justice to their high quality scripts and superb direction.

To the film-lovers, the name Madhubala builds an image of a goddess of love who possessed mesmerizing beauty, subtle sensuality, dazzling radiance, and an almost killing charm all in one. She was blessed with qualities that are rare–the ability to express an array of emotions with her eloquent eyes, be it romance, tragedy or comedy; this combination made her the heartthrob of her time, and remains so to-date.

Consider the fact that she acted as heroine opposite legendry heroes like Motilal, Prem Nath, Kidar Sharma, Nasir Khan, Ashok Kumar, Bharat Bhoshan, Raj Kapur and Dev Anand, but the two that cast an ever-lasting shadow on her life were Dilip Kumar and Kishore Kumar. Sadly, both hurt her, and the scars they left on her heart proved lethal.

It is amazing that, in her long career as an actress, she acted with Dilip Kumar only in four movies but she began to love him to the point of no return – a fact Dilip Kumar knew, but couldn’t do what he ought to have done. Mughl-e-Azam was the long movie that brought them together and also separated them forever. This tragedy is reflected in her performance in that movie. That’s why even now this movie is considered to be the one in which she comes out as the queen of acting; if one watches the sequence when she dances in the royal court singing the great lyric “Jab payar kiya to darna keya”, her status as the master actress is established beyond doubt.

While Dilip Kumar was never unkind to her, by marrying her and then neglecting her, Kishore pushed her to a point that caused her heart ailment to aggravate. He did reluctantly take her to London in 1960 for treatment, but then left her at his friend Madhur’s house because he was too ‘busy’ acting and making friends with her next wife Leela Chandavarkar.

There is none to tell how she passed her days until 1969. She was very religious and prayer must have been a constant help but long weary days must have been immensely frustrating as she would sometimes reflect sorrowfully saying: Jab zara kaam ki samajh aaye, uparwale ne kaha ab bas.

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March 2012

A rt & Literature Sadequain – putting together pain, art and literature

F

During that period, he also published his rubaeeyat–collection of his poems–that was one of a kind in terms of his view of the world, love and society and in keeping with his soofi mindset; another peculiarity about the book was that it was bound in a cover on which was pasted a texture made out of jute.

He had his own style of humour too. One of my elder brothers was a close friend of Sadequain.

I recall that, on the launching of his rubaeeyat, a big function was organized at the lawns of Karachi’s Art Council. That evening, I joined my brother who was a guest at this function. Sadequain was standing at the entrance to meet the guests. When he saw me, he asked my brother “yeh mausoof kon hain?” My brother told him that I was his youngest member of our family. I can never forget what he then said: “achcha to hey hai khurchan” – perfect purbi description of my status.

During the 1960s, he had established himself as a world class artist with the exhibition of his paintings in the art galleries of Paris, London, New York, Washington, Moscow, Melbourne and Cairo. By that time, besides painting on the canvas, he had also earned global reputation for painting murals. Besides painting murals on the walls of the UN headquarters, he had painted murals in many other monumental buildings, and the biggest of his murals was painted on a wall of the Power House at the Mangla Dam. The most difficult of them all was to paint one on the roof of the Frere Hall at Karachi after this premises was given to him by the state as his gallery.

Achieving perfection was the life-long quest of Sadequain; it kept him going up to the very end of his life. Deep inside, he was agitated and pained by what went on around him–many blatant inequalities. But these feelings rarely came out in the open except in his absolutely picturesque representation of these inequalities; many of his paintings depict the inequali

ebruary 10 marks the day when, back in 1987, one of the greatest social thinkers and expressionists of the last century, the legend called Sadequian, departed for the heavens leaving the world plenty to read–his rubaees–and to admire–his paintings and murals–that continue to bewilder the world. In less than 57 years of his life, he achieved what few others did, and was ranked along with Vincent van Gogh and Frida Kahlo–artists who expressed their rebellious feelings with a magical capacity to portray them.

In a PTV interview, Sadequain had disclosed that he began painting very early in his life, in fact when he was only six years old. At that time, he used white chalk, char coal, or red clay, and his canvas were house walls. The use of house walls as canvas had its risks–scolding by the residents. Once he painted a picture on the freshly white-washed back wall of his uncle’s house and the punishment therefor was that he had to clean the wall with his own hands. Recalling this incident, Sadequain said “mujhey is bat ka afsoo’s na tha ke meri tasweer mitai ja rahee thee, afsoo’s to yeh tha ke mera nazariya mitaya ja raha tha”. Not many of us can put it so passionately.

It showed how sincere he was with his cause–depicting what was wrong with the society and, as time passed, he did that with remarkable success. He was keen on spreading this consciousness far and wide. That’s why, after migrating to Pakistan, the first thing he did was to begin teaching at an art school in Karachi. By 1954, he had accumulated a collection of art works and the first exhibition thereof was held, not in Karachi, but in Quetta. The press coverage of that event attracted attention of Hussain Shaheed Suharwardy, then Foreign Minister, who invited Sadequain to hold an exhibition of his paintings at his(suharwaoy’s) residence.

In the spring of 1963, he visited Gilgit and Skardu and what he observed there had a lasting influence on him. According to him, “all that I have painted since is based on the ‘calligraphy’ that itself is influenced by the structure of the cactus.” In the 1960s, he lived in the Sibtain Manzil off the road leading from the first Chowrangi of Nazimabad to Liquatabad. I often saw him sitting in the balcony of the first floor of Sibtain Manzil busy painting on the canvas.

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A rt & Literature Sadequain’s life and achievements in brief Jun 1930 • Born in Amroha (UP, India) 1940 • Graduates from Agra University and migrates to Pakistan 1951-52 • Serves at Radio Pakistan 1954 • First paintings’ exhibition at Quetta 1955 • First paintings’ exhibition at Karachi 1955 • Paints first mural at Jinnah Hospital 1960 • Receives Tamgha-i-Imtiaz 1960 • Receives First Prize at National Arts Exhibition 1961 • Is adjudged Laureate Biennale at Paris 1961 • Paints The Treasures of Time mural at the State Bank of Pakistan, Karachi 1962 • Receives Pride of Performance medal 1962 • Holds paintings’ exhibition at Musee Maison du Culture, Le Havre, France 1963 • Visits US to hold exhibition in Washington DC 1964 • Illustrates L’ Etranger by Albert Camus 1965 • Paints mural in Mangla Dam 1968 • Paints mural ‘Quest for Knowledge’ in the library of Punjab University 1970 • Calligraphy of ‘Sura Al Arehman’ 1973 • Paints mural on the ceiling of Lahore Museum 1974 • Tours the Middle East to exhibit his paintings 1976 • PTV produces a film entitled ‘Mojza-e-Fun’ on Sadequain and his life 1981-82 • Tours India for exhibiting his art 1985 • Is provided the first floor of Frere Hall his gallery, paints Faiz’s verses 1986 • Starts painting mural for the ceiling of Frere Hall, Karachi Feb 1987 • Dies in Karachi

ties in striking fashion reflecting on the depth and intensity of his feelings. The art form he invented–use of lines–is unique and has added a new dimension to graphic art.

He did not look upon art as a source of enrichment. To him, selling paintings amounted to “selling them like toilet soap”. He was always in favour of giving his paintings to those who had the intellectual capacity to appreciate art; to him that was the real reward a painter should aspire for.

In the mid 1980s, Mehdi Masud, then Pakistan’s ambassador in Kuwait, and late A.B.S. Jafri, then Executive Editor of the Kuwait Times, convinced the Kuwaiti government to hold an exhibition of Sadequain’s paintings in Kuwait. Sadequain travelled to Kuwait to be present at the opening cere- mony of the exhibition, at which the chief guest was Kuwait’s Finance Minister.

While the minister moved around the hall admiring the paintings, Sadequain accompanied him explaining what the paintings depicted. Obviously, the minister liked a painting, and so asked Sadequain about its price. Sadequain looked at him in shock, and said “you can’t pay for it”. Apparently, by that time, Sadequain had formed a firm view about the minister’s capacity for appreciating art and its sensitivities.

Sadequain was an ardent admirer of Mirza Ghalib’s poetry; he prided himself in being a disciple of Ghalib, and as the proof thereof, one of the finest collections of his paintings depicts Ghalib’s most imaginative verses. In fact, this collection does justice to portraying what Ghalib actually conceived in these verses. It only proves yet again that one great man recognizes the other great man.

Towards the end of life, Sadequain re-focused on the Qur’an and the universal message of justice and equality contained in it; the exercise inspired him to lift calligraphy to a new height when he began using calligraphy not merely to communicate the Qur’an’s message but to portray its essence. This was his way of inspiring people to mend their conduct by bringing it in line with divine scheme.

When one looks at the entirety of Sadequain’s life-long effort the observer is impressed by the way Sadequain used almost every moment of his life in purpose-oriented creativity. What makes him truly majestic is the fact that he never sought any- thing for himself; all he strived for was a better, sane and a more equitable society that truly believed in and practiced the true human values.

All his life Sadequain tried to get this message across in the most attractive fashion–art–that speaks a universal language, and is understood by all irrespective of their culture, beliefs and historical backgrounds, and so has the capacity to bring them together to agree on all that is in the common interest of mankind, which makes him a universal legend.

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S ports Cricket: the shocking catapult

A

fter winning the Test series 3-0 against England, Pakistan’s cricket team shocked the cricket lovers by its consistent poor performance in the 1-day as well as T20 matches.

While the viewers expected no miracles in the team’s batting performance, slide in bowling performance was shocking.

During the first 1-day match, batting was simply below par given the poor shots played by the batsmen that resulted in losing that match by 130 runs – 50% of what England scored earlier. In that match, besides poor batting and bowling, the mistake that helped England accumulate a score of 260, was poor field placing that allowed too many singles to be scored.

Yet, Misbah learned no lessons. In the second match too, he had roughly the same field placements, which permitted too many singles to be scored. Although batting did improve but reckless hurry to score runs caused middle order batsmen to virtually throw away their wickets–an attitude that one does not expect of veterans like Yunus Khan and Shahid Afridi.

The loss of the first two matches was blamed on losing the toss and batting second, but it wasn’t the case in the third match. In that match, reckless batting by top order batsmen caused the mess. In the middle order, Misbah himself shocked the viewers with his performance as a batsman. It seemed that he was overly worried by the fact that, despite losing the earlier two matches, the top order batsmen had again let the team down.

But that should hardly be the captain’s attitude. Fighting back is what distinguishes a captain from the rest.

Although Umar Akmal and Afridi did a good job of uplifting team morale, they could not afford to be out when they were.

This was compounded by poor bowling and fielding when the English team came to bat. The fact that just one English batsman was sent back to the pavilion reflects on the quality of bowling and the strategy adopted by Misbah.

In the fourth and the final 1-day match again Pakistan won the toss and elected to bat but without much success because of poor batting by the middle order though Misbah did well by staying on virtually up to the end. But the performance of Shahid Afridi left much to be desired; did he really have to hit that six that turned into an easy catch at the mid-wicket boundary? It is unfortunate that, in the final overs, when it seemed that with careful batting Pakistan could score 250, or near that level to really challenge England at long last, the last four wickets were simply handed over to the English side without much effort. This was simply reckless as proved by the fact that England equalled Pakistan’s score in 49.2 overs. If Pakistan had been a bit more careful, they had a chance.

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There is no doubt that Misbah led the Pakistani team very ably in the Test series. But by losing the 1-day matches series 4-0, Pakistan team gave its critics the opportunity to say that Pakistan’s 3-0 victory in the Test series was a freak; Pakistan lacks the clout for playing well on a consistent basis. Though it may sound harsh, the fact is that there was overreliance on spinners–Ajmal, Rehman and Hafeez–a flawed strategy since there is no option except strengthening all areas of offence and defence, especially fielding.

Except Yunus, Misbah and Afridi, the team has no solid batsmen, that reflects poorly on the quality of coaching in batting. As for fielding, this always was, and continues to be the weakest link reflecting on the failure of successive fielding coaches hired by the PCB in the recent years.

The other issue that may have had its influence on some players’ performance may be uncertainties over the impending changes in team management i.e. the possible removal of Mohsin Khan which reportedly was being “pondered” upon by the PCB while the Test match series was on. By the time the 1-day series began, it became much clearer that PCB was Alastair Cook and Misbah-ul-Haq at the toss, Pakistan v England, seriously considering

1-Day Series Results

• Match 1, February 13: Batting first England scored 260 runs and lost 7 wickets Batting second Pakistan were all out 130 runs in 35 overs • Match 2, February 15: Batting first England scored 250 runs and lost 4 wickets Batting second Pakistan were all out 230 runs in 49 overs • Match 1, February 18: Batting first Pakistan were all out for 222 runs Batting second England won the match in 37.2 overs • Match 1, February 21: Batting first Pakistan scored 237 runs and lost 10 wickets Batting second England won in 49.2 overs

Pakistan’s ranking in 1-day matches fell to 6 from 5 March 2012

S ports hiring Dave Whatmor for the job. The lay-off of Waqar Yunus clearly had a positive effect on the team morale as shown by the results achieved after his exit from the scene, but that doesn’t seem to be the case as PBC prepares to sideline Moshin Khan, since under his leadership, the team seemed fairly well gelled and a cohesive lot and performing as a group of committed players, all trying to achieve combined results, not keen on individual goals. In the 1-day series, the team seemed confused–a lot that wasn’t committed to win.

The job was made far more difficult by the new rules that allow using separate balls for from each end the pitch, which keeps both the balls fairly unscarred and thus not ideally fit for the spinners to show results as they did in the Test matches; this had its influence on the performance of Pakistan’s spinners.

a different mindset and competitive approach. Is it fair to expect players to do so through match practice in a matter of just five to seven days? Logic as well as the recent experience suggests otherwise. One week’ (at time less than that) is not enough to alter the player ‘mindset’ for switching over to the demands of the new, faster match-type. This was proved by the 2-1 loss of the T20 series. In this series, while Pakistan won the first match, it went down in the other two matches, performing poorly in the second match in which the entire team was dismissed for a paltry score of 112 in 18.2 0vers. It was one of the worst performances of the Pakistan team in a T20 match. In the third and final match, while Pakistan managed to limit the England team’s score to 129, yet again it failed in batting, and lost the match by just 5 runs primarily because it tried hard to play a defensive game.

In this match, one thing became pretty clear; Misbah has lost the touch for playing a game of this sort. Far too often, he would move sideways as the bowlers came in to bowl, and thus afforded them a chance to make a last moment change in the way they bowled. Each time, he either failed to connect or ended up scoring a single run. That’s not how you play a T20 match.

Given the weaknesses – batting order not performing as well as required to in such conditions – the team simply crashed; frustration of the players was visible as each batsman returned to the pavilion disappointed by his performance.

Besides, how the umpires perform their task makes a lot of difference to the match result. As often, the close decisions were questionable. Speaking of new rules of cricket, in the first T20 match, Asad Shafique was declared run out by the third umpire though the ball didn’t touch the wickets; Swan managed to drop the bails with his arm pit. Given such rule changes and quality of umpiring despite the DRS technology, God alone knows where cricket is headed for.

Neither Ajmal nor Rehman, nor Hafeez proved as effective as they were in the Test matches. Frustration was writ large on their faces, and rightly so, because they had performed remarkably well in the Test series.

The other loss was that, while all pacers in the English team benefitted the most from this rule change, over-reliance on its spinners left Pakistan at a distinct disadvantage. With pacers like Aamir and Asif no longer available to play for the team, now it seems for years, Pakistan needs to identify and induct good pacers into the team. This is not to suggest that Cheema and Junaid be replaced but while they continue gaining experience, Pakistan should be on the lookout for more spinners. It seems that the decision to replace Mohsin Khan did have its influence on the players’ psyche.

There is another side to this failure that was overlooked –length of time over which players had to go on playing and the sequential format of match-types. The fact is that the players were made go on playing for too long a period overburdening them with workload well beyond their capacities.

It is a matter that must be considered very seriously by PCB; future series should be planned keeping this factor in mind if Pakistan is to go on performing well.

The other issue to be looked into is whether it is sensible to expect players to play a mix of Test matches, 1-dayers as well as T20s in quick succession because all these match-types call for Kieswetter in action

Star performers in the 1-day series

Highest number of runs: England skipper Alistair Cook was the top performer with two centuries and a total of 323 runs; a remarkable performance given the fact that in the Test match series earlier England suffered a 3-0 defeat.

Highest number of wickets: England’s pacer Steven Finn was the top performer; he took 13 Alastair Cook celebrates consecutive wickets for 134 runs at an average hundreds against Pakistan of little over 10 runs a wicket. He was devastating in the third T20 wherein he took 3 wickets for just 24 runs.

Highest number of catches: England’s wicket keeper Kieswetter was the top performer he took 7 catches, the highest number of catches taken by any player in the 1-day series.

Steven Finn

T20 Series Results

• Match 1, February 23: Batting first Pakistan scored 144 runs and lost 6 wickets Batting second England scored 136 runs and lost 6 wickets • Match 2, February 25: Batting first England scored 150 runs and lost 7 wickets Batting second Pakistan were all out 112 runs in 18.2 overs • Match 3, February 27: Batting first England scored 129 runs and lost 6 wickets Batting second Pakistan scored 124 for 6 and lost the match by 5 runs

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March 2012

A strology Your Horoscope March 2012

by Dr. Aameer Mian www.astrohope.com

ARIES: Your ruling planet Mars will guide you to opt for severel prevention measures. When it comes to dealing with your subordinates, you are advised to be polite with them to produce better results. Pay special attention to health issues because any harming pressure can put you in risky troubles. On the other hand, seek spiritual succor by participating in charity for the welfare of people.

Do give alms and money to the poor to ward of evil from you. Be careful while driving. Venus-Mars trine encourages high sense of beauty, keen interest in decorating your house and positive understanding of running projects in creative fields. You are advised to win the trust of your sponsers and co-workers. Keep your business papers arranged because demands can be made at any time. Pos. dates:March, 13,14,15,16,29 Neg. Dates:4,5,6,30

LEO:Being your ruling planet Sun may make

the acquisition of property or inheritance possible in this month. Those who are getting married may achieve great benefits. Spend wisely! Long yearning for travelling will be fulfilled. Your interest in the fields of education and law will be enhanced. Negative influence of stars will subject you to accidents, so keep praying for your safety and drive slowly. Do not take psychological depression and nervous system panic for granted, have regular check-ups. Find solutions to nagging loneliness and keep visiting some friends and relatives.

Choose words wisely while speaking. In the end of March, your interest in creative works will bloom finely. Take advice from experts before landing into any business commitment. In the last week, be careful of jealous people. Pos. Dates:March, 13,14,15 Neg. Dates: 3,4,26,29,30,31

TAURUS:This month your ruling planet Venus attracts you torwards works of social welfare. Positivity in your character will enhance your respectable status in family, friends and colleagues. But, at the same time, some serious concerns can cause gnawing troubles, so be careful not only in domestic affairs but love issues as well. Some projects of mutual cooperation in bussiness will ensure real progress. In the middle of this month, several hampered assignments will find new expressions of growth and opportunity. Some unexpected success will make you extremely happy. Some important events are taking place in the family. For financial gain—accept propsals of mutual interests from business partners. In the end of month, some old misunderstandings will be resolved through frank exchange of words. Do not hesitate to speak your mind! Pos. Dates:March, 13,14,15,29,30 Neg. Dates: 3,4,5

VIRGO:Under the influence of

Mercury, your interest in the spheres of literature and science will be rekindled. You will gain good reputation among peers.

Mutual business ventures are favoured this month. In the middle of March, some law concers can come up requiring extraordinary attention. You are advised to show patience towards your life partner in the end of this month. Do not invest in business until you grab complete control of your project. Be careful in writing and speaking. Power of decisiveness will be stronger. Best thing in these days is that misunderstandings will be resolved and through communication you can find new ways.

Pos. dates: March, 17,18,20,23,29,30 Neg. dates:4,5,6,7,13

LIBRA:Your ruling planet Venus will bring your personality under spotlight and a sudden boom in some financial matters will increase your interest in literature. Marriage, business and inheritance related issues will get significance. Unexpected clashes and misunderstandings are possible. Try hard to make your dreams come true and learn from your intution. Be careful in business. Under favourable influence of stars, works of cooperation will be enriched. Participation in important events will make you shine among others. In the mid of March, you will strive hard to achieve your goals. Some nagging complications will be tackled brilliantly by you. Solve your problems with the help of communication. Pos. Dates: March, 5,6,7,13,14,15,29,30 Neg. Dates: 3,4,5

GEMINI:Presence

of Mercury encourages strong relationship possibilities and keen interest in literary endeavors. Be patient, control your nerves and don’t get impatient with anyone. Spend money wisely and schedule your time accordingly. Before taking decisions__ ask your elders. Under the negative influence of stars__expectations with friends will not be fulfilled. So, behave practically enough in order to make coming obstacles into stepping stones. In the end of March, your health will be sound. Travel opportunities will prove to be helpful and your business will flourish with as much efforts as you put in it.

Mantra for this month is Stay positive! Pos. Dates:March, 17,18,20,23,29,30 Neg. dates:4,5,6,7,13

SCORPIO:Your ruling planet is Mars that is going to disappoint you in hoping against hope.

Movement of Pluto encourages healthy travelling opportunities. Help from supportive siblings will be of great value. Pay special heed to health issues.

Provide essential boost to your sense of confidence. Jupiter-Pluto trine establishes stability and self-independency. Under the influence of some planets, projects of mutual cooperation are favoured. Utilize your creative skills to reach your destination.

Romantic pursuits will bring satisfaction. In the mid of March, Mars-Pluto trine produces new avenues to improve your current situation. In the end of this month, Sun-Puto square instills negativity_ so be vigilant and avoid meeting with gossip-lovers and jealous people. Pos. Dates:12,14,16 Neg. Dates:4,5,6,30

CANCER:Your chart for the month of March

displays strong cooperation from close relations and friends. Their help is definitely enabling you to work optimistically with high hopes and devotion. Presence of Mars is what that is hampering your way as far as travelling and relationships are concerned.Some misunderstandins are popping up! Beware of gossip-mongers. But, the good news is that your business will flourish in this month and love of siblings will show you new avenues to cope with your current problems. Projects of mutual cooperation can suffer so make wise choices. In the middle of this month, some jammed plans will continue in progress and psychological depression will be lifted from your soul.

Pos. dates: March2,3,25,26,30,31 Neg. dates:11,12,15,16

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March 2012

A strology SAGITTARIUS:Jupiter

is your key planet inviting cooperation and recognition among colleagues and team-mates. Moreover, your health will improve during this month. On 12 and 13 March, Jupiter will create trine with Pluto _ this effect will be pleasant, harmonious and full of new opportunities for you. Struggle hard to pursue goals and add new feathers in your hat. Wise strategies and well-thought plans will make you achieve great heights. In the mid of March, Venus-Jupiter conjunction will create stability in political and sociological spheres. Your sense of generoisty will bringsyou good reputation.Meeting with some priviliged icons in some ceremony is going to benefit you in many ways.

Mars-Jupiter trine will also inject positive thoughts and ensure quality success. Follow your intuition! Pos. Dates: March 12,13,14,15,16 Neg. Dates:3,4,5

among close relationships. Luck in some lottery or jackpot can work magic. Pos. Dates: March,12,13,14,15,16 Neg. Dates:3,4,5

CAPRICORN:Saturn rules your birthchart, it will move in a retrograde position in this month. That is why, it is important that you wisely determine a positive plan for the month of March. To find satbility and career growth_ be patient. In the beginning of March, Venus-Saturn opposition will test relationships, so be tolerant of others. The middle of month ensures better health as Venus-Jupiter trine is going to happen. Any oversees travel opportunity can come up with positive perspectives. Excellence in the field of education is also supported. Property related issues may bring great fortune. In the ending days of March, Mercury-Venus sextile will help in clearing up misunderstandings

PISCES:Jupiter rules your house; it will encour-

AQUARIUS:Saturn is going to put obstacles

in the academic field. Students and those willing to go abroad may witness dalitoriness. Influences of Uranus will attatch extraordinary importance to your siblings. In the beginning of March, Venus-Saturn opposition is going to create some problems but ‘courage’ is the key to success and it can heal wosening situations. On 6,5,18 and 19 March Mercury-Uranus conjunction will disturb equillibrium of your mind but blissful presence of friends will play its role to rescue you from stress. In the last week, Sun-Uranus conjunction will rekindle your artistice powers and you will get financial gains.

Pos. Dates: March, 12,13,14,15,16 Neg. Dates:3,4,5

age respect for elders. You will definitely be planning some trip to an exotic place. Under the influence of Neptune, confusion from your way will be cleared out.

In the first week of March, Venus-Neptune sextile will instigate romantic passions in your heart. Make your decisive powers stronger. In the second week, Jupiter-Pluto trine will definitely create harmony at home. Venus-Jupiter conjunction is going to produce positive effects on your life and you will make some new friends. On 14 and 15 March, some positive influence of stars will help you in strengthening your active spirits back to work.Enjoy! Pos. Dates: March, 12,13,14,15,16,18 Neg. Dates: 3 to 5

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